670
annual savings that will result from this reduced investment, assuming
that sales remain constant. (Assume a 360-day year.)
(4) If the firm’s bad-debt expenses decline from 2% to 1.5% of sales, what
annual savings will result, assuming that sales remain constant?
(5) Use your findings in parts (2) through (4) to assess whether offering the
cash discount can be justified financially. Explain why or why not.
e. On the basis of your analysis in parts athrough d,what recommendations
would you offer Teresa Leal?
f. Review for Teresa Leal the key sources of short-term financing, other than
accounts payable, that she may consider in order to finance Casa de
Diseño’s resource investment need calculated in part b.Be sure to mention
both unsecured and secured sources.