Terry's Kitchen is currently experiencing a bad debt ratio of 7 percent. Terry is convinced that, with tighter credit controls, this ratio will decrease to 4 percent; however, she also expects sales to decrease by 12 percent as a result. The cost of goods sold is 80 percent of the selling price. Should Terry change her credit policy? (Show calculations!You should ignore interest costs.)

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Lets analyze the situation step by step Current Situation Bad debt ratio 7 Sales S unknown C... View the full answer