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Credit Policy. As treasurer of the Universal Bed Corporation, Aristotle Procrustes is worried about his bad debt ratio, which is currently running at 6 percent. He believes that imposing a more stringent credit policy might reduce sales by 5 percent and reduce the bad debt ratio to 4 percent. If the cost of goods sold is 80 percent of the selling price, should Mr. Procrustes adopt the more stringent policy?

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Manal Elkhoshkhany, MBA
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  • MBA, California State University, Sacramento
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