2. Your company is considering a modification to your credit policy, as follows:
No bad-debt losses are expected.
The company's variable cost of sales is 80%.
Cost of capital is 20%
Should you adopt either the policy? Why?© BrainMass Inc. brainmass.com October 1, 2020, 7:51 pm ad1c9bdddf
Increased sales = 5 million
Increase in receivables = 5 million *45/360= 0.625 ...
Reasoning and computation given.