Your company currently has $1,000,000 in accounts receivable. Assuming a 360-day year, Its day's sales outstanding (DSO)
Question:
Your company currently has $1,000,000 in accounts receivable. Assuming a 360-day year, Its day's sales outstanding (DSO) is 45 days. The company wants to reduce its accounts receivable balance to $350,000 by pressuring more of its customers to pay their bills on time. The company's CFO estimates that if this policy is adopted the company's sales next year will fall by 5 percent from the current year's sales. Assuming that the company adopts this change and succeeds in reducing its accounts receivable balance to $350.000 and does lose 5 percent of its current sales next year,
what will be the days sales outstanding (DSO) following the change?
Financial Management Theory and Practice
ISBN: 978-0176517304
2nd Canadian edition
Authors: Eugene Brigham, Michael Ehrhardt, Jerome Gessaroli, Richard Nason