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Mimms Electronics is considering extending trade credit to some customers previously considered poor risks. Sales would increase by $150,000 if credit is extended to these
Mimms Electronics is considering extending trade credit to some customers previously considered poor risks. Sales would increase by $150,000 if credit is extended to these new customers with a return on sales of 12.35%. If the turnover ratio is 3 to 1 between sales and accounts receivable and no other asset buildup is needed to serve the new customers, what will Johnson's expected return on investment be?
Select one:
a. 37.05%
b. 18.97%
c. 23.58%
d. 34.87%
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