Ruth Company Currently Has $1,000,000 in Accounts Receivable

question 44

Multiple Choice

Ruth Company currently has $1,000,000 in accounts receivable. Its days sales outstanding (DSO) is 50 days (based on a 365-day year) . Assume a 365-day year. The company wants to reduce its DSO to the industry average of 32 days by pressuring more of its customers to pay their bills on time. The company's CFO estimates that if this policy is adopted the company's average sales will fall by 10 percent. Assuming that the company adopts this change and succeeds in reducing its DSO to 32 days and does lose 10 percent of its sales, what will be the level of accounts receivable following the change?

• A) $576,000
• B) $676,667
• C) $776,000
• D) $900,000
• E) $976,667

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Definitions:

United States Labor Force

The total pool of individuals in the United States who are available to work, including both employed and unemployed people.

Downward Slide

A situation of continuous decline or deterioration over a period of time.

Labor Market Segmentation Theory

A theory suggesting that the labor market is divided into separate segments, based on demographic, industry, or job characteristics, leading to disparities in work conditions and pay.

Primary And Secondary Labor Markets

The division of the labor market into two sectors: the primary with stable, well-paid jobs with benefits, and the secondary characterized by lower wages, less stability, and fewer benefits.