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Fat Tonys Bookkeeping is thinking of hiring Fat Tonys cousin Guido to help with collections of accounts receivable. Fat Tony provided you with the following

Fat Tonys Bookkeeping is thinking of hiring Fat Tonys cousin Guido to help with collections of accounts receivable. Fat Tony provided you with the following information:

Yearly sales

600,000

Current average collection period

45 days

Average collection period with Guido

5 days

Percentage sales lost if they hire Guido

5%

Guido's annual charge

5,000

Fat Tonys return on assets

20%

Fat Tonys profit margin

25%

Should Fat Tony hire his cousin Guido to help with collections?

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