5. The Fettucini Company has budgeted P40.5 million in sales for the coming year. The credit sales will be for 80% of overall sales at terms of n/30. Fettucini forecasts that relaxing credit requirements will raise credit sales by 20%. Furthermore, it will lengthen the average collection period from 30 to 40 days. Based on a 360-day year, how much would a proposed relaxation of credit requirements result in an improvement in the average accounts receivable balance?
5. The Fettucini Company has budgeted P40.5 million in sales for the coming year. The credit sales will be for 80% of overall sales at terms of n/30. Fettucini forecasts that relaxing credit requirements will raise credit sales by 20%. Furthermore, it will lengthen the average collection period from 30 to 40 days. Based on a 360-day year, how much would a proposed relaxation of credit requirements result in an improvement in the average accounts receivable balance?
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:5. The Fettucini Company has budgeted P40.5 million in sales for the coming year. The
credit sales will be for 80% of overall sales at terms of n/30. Fettucini forecasts that
relaxing credit requirements will raise credit sales by 20%. Furthermore, it will lengthen
the average collection period from 30 to 40 days. Based on a 360-day year, how much
would a proposed relaxation of credit requirements result in an improvement in the
average accounts receivable balance?
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