3. Accounts receivable Effective credit management involves establishing credit standards for extending credit to customers, determining the company's credit terms, and setting up procedures for invoicing and collecting past-due accounts. The following statement refers to a credit management policy. Select the best term to complete the sentence. How a company handles its credit accounts, including methods of invoicing and collecting past-due accounts, is indicated by the company's credit terms Consider the case of Western Gas & Electric Co.: Western Gas & Electric Co.'s CFO has decided to take a closer look at the company's credit policy. Western Gas & Electric Co. has annual sales of $396.3 million, and it currently has an accounts receivable balance of $47.6 million. The first step in analyzing the firm's credit policy is to determine its days sales outstanding (DSO). Based on this information, Western Gas & Electric Co.'s DSO is (Note: Use 365 days as the length of a year in all calculations.) The average DSO for Western Gas & Electric Co.'s industry is 53.4 days. Assuming that its sales stayed the same, what would be Western Gas & Electric Co.'s receivables balance if it maintained the industry average DSO? Western Gas & Electric Co.'s CFO thinks that the company has not done a very good job of enforcing its credit policy. The CFO believes that if the company were to better enforce its credit policy, it would reduce its DSO to 30 days; however, this will cause Western Gas & Electric Co. to lose 4% of its sales revenue. What would Western Gas & Electric Co.'s expected accounts receivables balance be if it decides to tighten its credit policy? $26,579,237 $32,833,175 $37,523,628 $31,269,690