B1&B2

Question 1

what are the methods to convert AR into cash?

Answer 1

1. Collection agencies - used to collect overdue AR
2. Factoring AR - selling AR to a factor for cash
3. Cash discount - offering cash discount to customers for paying AR quickly. Ex: 2/10, net 30

Question 2

what is trade discount?

Answer 2

Trade discounts offer discount on future merchandise purchases offered to trade customers.

Question 3

what are the discounted cash flow methods

Answer 3

include NPV, IRR, and profitability index?

Question 4

what is cash conversion cycle?

Answer 4

days in inventory + days sales in accounts receivable - days of payables outstanding