20. Credit policy (S31.3) As treasurer of the Universal Bed Corporation, Aristotle Procrustes is worried about his bad debt ratio, which is currently running at 6%. He believes that imposing a more stringent credit policy might reduce sales by 5% and reduce the bad debt ratio to 4%.

If the cost of goods sold is 80% of the selling price, should Mr. Procrustes adopt the more stringent policy?