The three companies shown below have gathered data to determine whether they should factor their accounts receivable.

Required:
Prepare calculations to determine whether any of these companies would be better off to factor its receivables.

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Great Ski Ltd. Rich Yard Inc. Bob Ore Mines Current receivables policy Unit sale price Contribution margin per unit Annual sales on credit Average collection period in days Bad debts per year Interest rate on line of credit $30 $14 $345,000 50 $17,000 11% $160 $50 $820,000 75 $24,000 7% $55 $25 $1,500,000 120 $70,000 12% Proposed new receivables policy Revised average collection period in days Cost % reduction in sales 20 $30,000 3% 30 $20,000 8% 60 $60,000 5%