As part of a union negotiation agreement, the Union Clerical Workers Union conceded to be paid every two weeks instead of every week. A major firm employing hundreds of clerical workers had a weekly payroll of $1,000,000 and the cost of short-term funds was 12 percent. The effect of this concession was to delay clearing time by one week. Due to the concession, the firm ________ realized an annual loss of $120,000, realized an annual savings of $120,000, increased its cash cycle, or decreased its cash turnover.© BrainMass Inc. brainmass.com June 3, 2020, 5:42 pm ad1c9bdddf
Wages are now paid every two weeks instead of weekly payments. So, the current liabilities increase by $1.0 million. Since ...
The negotiation agreement is discussed in the solution.