credit period as all debtors do not strictly adhere to the condition stipulated. The company achieves a contribution of 40% on sales and the firm requires a 20% p.a return on investment (a) Credit period Existing policy Option I Option II (days) 30 14 60 (b) Sales (Rs. Lakhs) 10.00 9.60 12.00 (c) Bad debts (% of sales) 5 3.33 6 (d) Cost of credit administration (Rs. Lakh) 0.20 0.12 0.25 (e) Average effective collection Period (days) 45 21 75 You are required to suggest. (i) Which credit period is more suitable to the company?