Problem: On average, Microlimp's accounts receivables total $3,000,000 on annual sales of $400,000,000.
What is Microlimp's average collection period?
How would the following actions affect a firm's current ratio?
1. Inventory is purchased and paid for with cash, it is not purchased on account.
2. The firm takes out a short term bank loan to pay its overdue accounts payable.
3. A customer prepays in full for specially ordered merchandise that it will take 60 days to manufacture.
4. Inventory is sold at the firm's normal 35% markup over cost.