Question
Brown Corporation had average days of sales outstanding of 19 days in the most recent fiscal year. Brown wants to improve its credit policies and
Brown Corporation had average days of sales outstanding of 19 days in the most recent fiscal year. Brown wants to improve its credit policies and collection practices, and decrease its collection period in the next fiscal year to match the industry average of 15 days. Credit sales in the most recent fiscal year were $300 million, and Brown expects credit sales to increase to $390 million in the next fiscal year. To achieve Browns goal of decreasing the collection period, the change in the average accounts receivable balance that must occur is closest to:
A. +$0.41million
B. -$0.41million
C. -$1.22million
please show how you got the answer!
thank you!
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