Industries Has Sales of $100,000 and Accounts Receivable of $11,500

question 60

Multiple Choice

Industries has sales of $100,000 and accounts receivable of $11,500, and it gives its customers 30 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?

• A) $267.34
• B) $281.41
• C) $296.22
• D) $311.81
• E) $328.22

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Definitions:

Gasoline

A liquid fuel derived from petroleum, primarily used as a fuel in internal combustion engines.

Complements

Goods or services that are used together, where the use of one increases the value or demand of the other.

OLED TVs

Televisions that use Organic Light-Emitting Diode technology to create images, known for their high contrast ratios and deep blacks.

Ceteris Paribus

A Latin phrase meaning "all other things being equal," used in economics to isolate the effect of one variable on another while holding everything else constant.