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Assume that you were hired by Dollar Captain in 2018 to develop and implement a new credit policy. At the time of your hire, the
Assume that you were hired by Dollar Captain in 2018 to develop and implement a new credit policy. At the time of your hire, the average collection period for an outstanding receivable was in excess of 90 days (far greater than the industry average). Thus the primary purpose of the new policy was to better screen credit applicants in an attempt to improve the quality of the company's accounts receivable. Shown as follows are sales and accounts receivable data for the past four years (in thousands). Based on the given data, calculate the account receivable turnover rate and average number of days to collect account receivable (assuming days in year =360 ) over the years and explain if the credit policy you developed successful? Explain. Explanations
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