Question (6) Directions: Click the Case Link above and use the information provi

Question

Question (6) Directions: Click the Case Link above and use the information provided in Hearth and Home, Part B, to answer this question: Hearth and Home presently offers 30 day terms to its customers. If Hearth and Home changed its terms to 45 days, and as a result, all customers paid 15 days later than before, what would be the approximate effect on the company's borrowing needs in 20Y3? OBorrowing needs would decrease by about $250,000 OBorrowing needs would increase by about $125,000 O Borrowing needs would increase by about $147,000 O Borrowing needs would increase by about $188,000

Explanation / Answer

Answer would be Option D $ 188000

New receivables = $ 376000 / 30 x 45 = $ 564000

Change in receivables = new - current = 564000 - 376000 = $ 188000

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