Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A company currently has $10,000,000 in accounts receivable and has day sales outstanding (DSO) of 60 days. The company wants to reduce its DSO to

A company currently has $10,000,000 in accounts receivable and has day sales outstanding (DSO) of 60 days. The company wants to reduce its DSO to the industry average of 45 days by pressuring more of its customers to pay their bills on time, but if this policy is adopted the company's average sales will fall by 20%. Assuming a 360-day year and that the company adopts this change, succeeds in reducing its DSO to 45 days, and does lose 20% of its sales, what will be the level of accounts receivable following the change? Answer without a $ sign, without a + or sign, and without decimal places

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Bakers Health Care Finance Basic Tools For Nonfinancial Managers

Authors: Thomas K. Ross

6th Edition

1284233162, 978-1284233162

More Books

Students also viewed these Finance questions