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:

Momentary Playmates

Individuals, typically children, who engage in spontaneous, short-term play or interaction without the expectation of a lasting relationship or ongoing connection.

Ludus

A style of love characterized by game-playing, fun, and casualness, without the intent of forming serious or long-term attachments.

Committed Relationship

A romantic partnership where individuals agree to be exclusive and dedicated to each other, often involving long-term intentions.