ABC INCs profit is declining because of the industrys slowdown. To enhance profitability and to preserve cash, ABC INC is considering shortening its credit period and eliminating its cash discount. Terms are currently 2/10, net 50 and would be changed to net 30. Currently, 60 percent of customers, on average, pay at the end of the credit period (50 days); the other 40 percent pay, on average, in 10 days and receive the discount. It is anticipated that under the new policy customers will pay, on average, in 20 days. At present, average monthly sales are $600,000, but they are expected to fall to $550,000 with the tightening of credit. Variable production costs are 69 percent, and bank financing is currently floating at 9 percent. Bad debt losses at 4.5 percent of sales are expected to drop to 1.0 percent of sales.