USA: +1 (725) 712-1730 
Sign in
In 20Y1, Rudy’s equipment offered its suppliers 30 day terms, and had accounts receivable days on hand of 30 days and sales of $2.5 million. In 20Y2, Rudy’s changed its terms to 45 days; all of its customers took advantage of the change and paid 15 days later than before. Sales in 20Y2 were $3 million, and accounts receivable at year end were $369,863.
How much did the company’s financing needs increase in 20Y2 as a result of the change in terms?
A) approximately $123,000
B) approximately $141,000
C) approximately $162,000
D) approximately $205,000
Expert Answer
Solution:-
a) Approximately $1,23,000
Reason:- Closing Receivable is $369863 as per 45 days policy. if it would have been 30 days policy in run, closing receivable would have been = 3000000*30/365= $246575
Additional Fund Required= 369863 – 246575 = $123288
