B2-M5 Working Capital Management 2

Question 1

what are the methods to convert AR to cash?

Answer 1

1. collection agency
2. factoring AR
3. cash discounts
4. electronic fund transfers: a method of payment, which electronically transfers funds between banks

Question 2

what is a trade discount?

Answer 2

trade discounts offer discounts on future merchandise purchases offered to trade customers

Question 3

what is average gross receivable balance?

Answer 3

it equals average daily sales x average collection period