Credit Policy. As treasurer of the Universal Bed Corporation, Aristotle Procrustes is worried about his bad debt ratio, which is currently running at 6%. He believes that imposing a more stringent credit policy might reduce sales by 5% and reduce the bad debt ratio to 4%. If the cost of goods sold is 80% of the selling price, should Mr. Procrustes adopt the more stringent policy?© BrainMass Inc. brainmass.com March 4, 2021, 5:53 pm ad1c9bdddf
Cost of goods sold= 80 =80% * 100
Bad debt @ 6%= 6 =6% * ...
The solution evaluates a stringent credit policy.