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 September 23, 2018, 10:21 am ad1c9bdddf - https://brainmass.com/business/credit-management-credit-policy-analysis-and-risk/credit-policies-should-you-adopt-either-the-policy-why-117919
Increased sales = 5 million
Increase in receivables = 5 million *45/360= 0.625 ...
Reasoning and computation given.