Business, 18.11.2019 21:31, anaijah

Garcia industries has sales of $167,500 and accounts receivable of $18,500, and it gives its customers 25 days to pay.
the industry average dso is 27 days, based on a 365-day year.
if the company changes its credit and collection policy sufficiently to cause its dso to fall to the industry average, and if it earns 8.0% on any cash freed-up by this change, how would that affect its net income, assuming other things are held constant?
assume all sales to be on credit.
do not round your intermediate calculations.

hint: focus on the dso to figure out how much freed-up cash the company will have. freed-up cash will be invested at 8%.a. $386.13

b. $601.18

c. $488.77

d. $562.08

e. $537.64

Answers: 2

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Garcia industries has sales of $167,500 and accounts receivable of $18,500, and it gives its custome...