Solve this questions answers Hudson Drilling & Mining (HDM) currently generates$90,000 in annual credit sales. HDM sells on terms ofnet 45, and its accounts receivable balance averages$15,000. HDM is considering a new credit policy withterms of net 30. Under the new policy, sales willdecrease to $85,000, and accounts receivable willaverage $17,000. Compute the days sales outstanding(DSO) under the existing policy and the proposed policy.

Step 1: Definition of Days Sales Outstanding (DSO)Days Sales Outstanding (DSO) is a financial metric…

Answered: Hudson Drilling & Mining (HDM)…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 33P

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Hudson Drilling & Mining (HDM) currently generates $90,000 in annual credit sales. HDM sells on terms of net 45, and its accounts receivable balance averages $15,000. HDM is considering a new credit policy with terms of net 30. Under the new policy, sales will decrease to $85,000, and accounts receivable will average $17,000. Compute the days sales outstanding (DSO) under the existing policy and the proposed policy.
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