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Net Profits and Average Payment Period

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1) What would be the average payment period if accounts payable is $20,000, cost of goods sold is $200,000 , and sales are $500,000.

2) How would I find the net profit, if margin earnings before interest and taxes is $20,000 net income is $10,000 , sales are $50, 000 and total assets are $100,000.

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Solution Summary

The net profits and average payment periods are determined.

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1) Average Payment period = Accounts payable/(Cost of goods sold/360) = 20000/(200000/360) = 36 days. It means the firm takes 36 days to pay off its credit ...

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