Comapny considering a more liberal credit policy to increase sales but expects that 8% of the new account will be uncollected.Collections cost are 6% of new
sales production and selling cost are 79% accounts reciev. turnover is
four times Income tax of 35% increase in sales of 70000 no other assest buildup required.
a- what are the level of accounts recievable needed to support the this sales expansion
b- What would be the incremental aftertax return on income?
c- Assume he also needs to increase level of inventory to support the 70000 in sales
should they give more liberal credit?