Dimon Products' sales are expected to be $5 million this year, with 90% on credit and 10% for cash. Sales are expected to grow at a stable, steady rate of 10% annually in the future. Dimon's accounts receivable balance will remain constant at the current level, because the 10% cash sales can be used to support the 10% growth rate, other things held constant. a. True. b. False.

Question

Business

Kody

27 March, 04:09

Dimon Products' sales are expected to be $5 million this year, with 90% on credit and 10% for cash. Sales are expected to grow at a stable, steady rate of 10% annually in the future. Dimon's accounts receivable balance will remain constant at the current level, because the 10% cash sales can be used to support the 10% growth rate, other things held constant. a. True. b. False.

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Jamie Clayton · Answer 1

given statement is false

Explanation:

increase in sale = 10 %

so here total sale is

sale = $5 million + 10%

sale = $5.5 million

and

cash sale is

cash sale = $5.5 million * 90%

cash sale = $4.95 million

so

credit sale is here as

credit sale = $5.5 million - $4.95 million

credit sale = $0.55 million

so here credit sale 0.5 million increased to 0.55 million

so 10% increase

hence regardless increase in cash sale is increase

so given statement is false