Accounts receivable changes with bad debts A firm is evaluating an accounts receivable change that would increase bad debts from 2% to 3% of sales. Sales are currently 50,000 units per month, the selling price is $20 per unit, and the variable cost per unit is $15. As a result of the proposed change, sales are forecast to increase to 80,000 units per month. If the cost of capital is 0.75% per month, should the firm change its credit policy?
Accounts receivable changes with bad debts A firm is evaluating an accounts receivable change that would increase bad debts from 2% to 3% of sales. Sales are currently 50,000 units per month, the selling price is $20 per unit, and the variable cost per unit is $15. As a result of the proposed change, sales are forecast to increase to 80,000 units per month. If the cost of capital is 0.75% per month, should the firm change its credit policy?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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