Question
Ruth Home Health currently has $1,000,000 in accounts receivable. Its days in patient accounts receivable (DPAR) is 50 days (based on a 365-day year). The
Ruth Home Health currently has $1,000,000 in accounts receivable. Its days in patient accounts receivable (DPAR) is 50 days (based on a 365-day year). The agency wants to reduce its DPAR to the industry average of 32 days by pressuring more of its customers to pay their bills on time. The CFO estimates that, if this policy is adopted, the agency's net patient service revenue will fall by 10 percent. Assuming that the agency adopts this change and succeeds in reducing its DPAR to 32 days and loses 10 percent of its net patient service revenue, what will be the level of accounts receivable following the change?
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