You are considering investing in Dakotas Security Services You have been able to locate the following information on the firm total assets are $32 million, accounts receivable are $4 4 million, ACP is 25 days, net income is $4 66 million, and debt to equity is 1 2 times All sales are on credit Dako...

Current ACP Accounts receivable x 365 Credit sales 25 44m x 365 Credit sales Credit sales 44m x 365 ...

You are considering investing in Dakotas Security Services. You have been able to locate the following information

Question:

You are considering investing in Dakota’s Security Services. You have been able to locate the following information on the firm: total assets are $32 million, are $4.4 million, ACP is 25 days, net income is $4.66 million, and debt-to-equity is 1.2 times. All sales are on credit. Dakota’s is considering loosening its credit policy such that ACP will increase to 30 days. The change is expected to increase credit sales by 5 percent. Any change in will be offset with a change in debt. No other changes are expected. Dakota’s profit margin will remain unchanged. How will this change in policy affect Dakota’s net income, total asset turnover, equity multiplier, ROA, and ROE? Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...