Universal Corporation Is Concerned About Their Current Bad Debt Ratio

question 74

Multiple Choice

Universal Corporation is concerned about their current bad debt ratio of 6%.The CFO believes imposing a more stringent credit policy may reduce sales by 5% and reduce the bad debt ratio to 4%.If the cost of goods sold is 80% of the selling price, determine if the new policy should be undertaken.

• A)Undertake; increase of 8.57% in profits
• B)Undertake; increase of 9.55% in profits
• C)Do not undertake; decrease of 8.57% in profits
• D)Do not undertake; decrease of 9.55% in profits

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Definitions:

Random Samples

A subset of individuals chosen from a larger population where each individual has an equal chance of being selected.

Populations

The entire group of individuals or items of interest from which samples may be drawn for statistical analysis.

Mean

The mean value of a group of numbers, found by dividing the aggregate of the numbers by how many numbers there are.

Difference

The result of subtracting one quantity from another, highlighting disparities or changes between them.