Lipa company currently has annual sales of P2,000,000.Its average collection period is 40 days, and bad debts are 5% of sales.The credit and collection manager is considering to institute a stricter collection policy, whereby bad debts would be reduced to 2% of total sales, and the average collection period would fall to 30 days.However, sales would also fall by an estimated of P250,000 annually.Variable costs are 60% of sales and the cost of carrying receivables is 12%.Assume a tax rate of 40% and 360 days per year. What would be the incremental investment in receivables if the change were made?

Answer: (45,833)