Question

Genatron Manufacturing (from problem 8) is considering changing its credit standards. Analysis shows that sales may fall 5 percent from 2014 levels with no bad debts from the change in sales. The cost of financing the increase in current assets is 8 percent.
a) Should Genatron change its credit policy?
b) Using the information stated in the problem, at what profit margin is Genatron indifferent between changing its policy or maintaining its current standard?
c) Using the information stated in the problem, at what financing cost is Genatron indifferent between changing or maintaining the credit policy?
d) Using the information stated in the problem, by what amount can the current assets change so that Genatron is indifferent between changing or maintaining their credit policy?


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  • CreatedMarch 27, 2015
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