Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. johnson electronics is considering extending trade

Johnson Electronics is considering extending trade credit to some customers previously considered poor risks. Sales would increase...

60.1K

Verified Solution

Question

Finance

Johnson Electronics is considering extending trade credit tosome customers previously considered poor risks. Sales wouldincrease by $120,000 if credit were extended to these newcustomers. Of the new accounts receivable generated, 6 percent willprove to be uncollectible. Additional collection costs will be 3percent of sales, and production and selling costs will be 71percent of sales. The firm is in the 15 percent tax bracket.

a. Compute the incremental income aftertaxes.

b. What will Johnson’s incremental return onsales be if these new credit customers are accepted? (Inputyour answer as a percent rounded to 2 decimal places.)

c. If the accounts receivable turnover ratio is4 to 1, and no other asset buildup is needed to serve the newcustomers, what will Johnson’s incremental return on new averageinvestment be? (Do not round intermediate calculations.Input your answer as a percent rounded to 2 decimalplaces.)

Answer & Explanation Solved by verified expert
4.2 Ratings (812 Votes)
    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

State if each of the following salts is acidic, basic, or neutral. Briefly, give your reason...

Chemistry
Q

WRITE COMPLETE SOLUTION 9. Suppose Paramecium caudatum cultured in a batch reactor obeys the logistic function X(t) =20,000/3.0...

Civil Engineering
Q

CC Car Wash specializes in car cleaning services. The services offered by the company, the exact...

Operations Management
Q

By looking ahead to the sides of your vehicle and behind vehicle as you drive...

Biology
Q

Step 1 In your initial post respond to the following prompt Consider or imagine a...

Biology
Q

The functions f and g are defined as f(x) = 8x - 7 and g(x)...

Basic Math
Q

nd the present value that will grow to 8000 if the annual interest rate is...

Algebra
Q

SSG Cycles manufactures and distributes motorcycle parts and supplies. Employees are offered a variety of...

Accounting
Q

Used Motors falsely accuses Value Cars, one of Used Motors competitors, of selling stolen cars....

Accounting
Q

Question 2 a) Volume Rate ...

Accounting
Q

what are some other examples of industries well suited to Pinterset marketing campaigns?

Accounting
Q

2. Shamrock Company had net income of $33,180. The weighted-average common shares outstanding were 8,400....

Accounting