The Swink Company expects to have sales of $20 million

this year under current operating policies. Its variables

costs as a proportion of sales are 0.8, and its cost of

receivable financing is 8 percent. Currently, the firm's

credit policy is net 25. However, its average collection

period is 30 days, indicating that some customers are

paying late, and its bad debt losses are 3 percent of sales.

Swink's credit manager is considering five alternative

credit policies given in subsequent slides.

Evaluate each alternative using the income statement

approach, compare with the current policy and suggest

the most financially viable alternative.