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Henderson Office Supply is considering a more liberal credit policy to increase sales, but expects that 10 percent of the new accounts will be uncollectible.
Henderson Office Supply is considering a more liberal credit policy to increase sales, but expects that 10 percent of the new accounts will be uncollectible. Collection costs are 2 percent of new sales, production and selling costs are 75 percent, and the accounts receivable turnover is three times. Assume income taxes of 30 percent and an increase in sales of S66,000. No other asset buildup will be required to service the new accounts. a. What additional investment in accounts receivable is needed to support this sales expansion? Incremental accounts receivable b. What would be Henderson's incremental aftertax return on investment? (nput your answer as a percent rounded to 2 decimal places.) Retum on incremental investment
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