Chap009 Solution Manual(1)

Hitting the road btn 9 8 telephone calls to visa and

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Hitting the Road — BTN 9-8 Telephone calls to VISA and American Express are the source of information for this solution. VISA reports that the average transaction fee it charges merchants is 3%. American Express has a range, depending on volume of business and average price of merchandise sold, which ranges from 2.95% to 4.5%. Some merchants often choose not to accept certain cards because the credit card fees are higher than others. In the case of VISA, compared to American Express, a merchant might have to pay as much as 1.5% more on its American Express transactions. This can be a major part of its net profit margin, especially for businesses such as grocery and hardware stores. 9-40
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Chapter 09 - Accounting for Receivables Global Decision — BTN 9-9 1. Accounts Receivable Turnover (EUR millions) Nokia (Current Year): €40,984 = 4.70 times (€7,981 + €9,444) / 2 2. Average Collection Period (or “Average Days’ Sales Uncollected”) Nokia (Current Year): 365 days / 4.70 times = 77.7 days 3. Nokia is more like Research In Motion than like Apple in terms of its turnover and collection periods. However, Nokia has a longer collection period than either of those competitors. Consequently, Nokia management might be well directed to focus on being more efficient with its receivables and lower its collection period. 4. EUR millions Total Receivables Percent of Total Current .................................... €7,302 91.5% Past due 1-30 days ................. 393 4.9% Past due 31-180 days ............. 170 2.1% More than 180 days ................ 116 1.5% Totals ...................................... €7,981 100.0% 9-41
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