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:

Drive-Belt Tension

The degree of tightness or looseness of a drive belt in machinery, which must be properly adjusted to prevent slippage and wear.

Pulley Alignment

The process of adjusting the position of pulleys in a belt-driven system so that the belt runs straight and true, ensuring efficient operation and reducing wear.

Jumper Cables

Electrical cables with clamps at both ends, used to start a vehicle by connecting its dead battery to a live battery.

Dead Vehicle

A vehicle that is unable to start or move due to mechanical or electrical failures.