Author: Anonymous

ABC Corporation had sales of $3.3 million last year, and it…

ABC Corporation had sales of $3.3 million last year, and it earned a 5% return (after taxes) on sales. Recently, the company has fallen behind in its accounts payable. Although its terms of purchase are net 30 days, its accounts payable represent 75 days’ purchases. The company’s treasurer is seeking to increase bank borrowing in order to become current in meeting its trade obligations (that is, to have 30 days’ payables outstanding). The company’s balance sheet is as follows (in thousands of dollars):   Cash $100 Accounts payable $600 Accounts receivable 300 Bank loans 700 Inventory 1,400 Accruals 200    Current assets $1,800    Current liabilities $1,500 Land and buildings 600 Mortgage on real estate 700 Equipment 600 Common stock, $0.10 par 300 Retained earnings 500 Total assets $3,000 Total liabilities and equity $3,000   How much bank financing is needed to eliminate the past-due accounts payable? Enter your answer as a positive value. Do not round intermediate calculations. Enter your answer as follows: if your answer is $50,000 enter as 50,000.