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Andrej [43]
3 years ago
11

Garcia Industries has sales of $200,000 and accounts receivable of $18,500, and it gives its customers 25 days to pay. The indus

try 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?
Business
1 answer:
katrin2010 [14]3 years ago
6 0

Answer:

$488.77

Explanation:

Rates : 8%

Sales : 167,500

A/R : 18,500

Days in Year 365

Sales/Day: 458.90

DSO : 40

Industry DSO : 27

(x / 167,500) x 365 = 27

Solve x = 12,390.41

x = This is the sum to be deducted for receivable accounts.

18500 - 12,390.41 = 6,109.59 decrease in Accounts Receivable

6,109.59 x 8% = 488.77

Interest earned and net revenue generated.

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Based on the information given regarding the monopoly power, the remedy by the court will be<u> divesting itself of the control or ownership of</u><u> Child Shops</u>.

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Answer:

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