Great Munchies (GM) Corporation has a variable operating cost ratio of 60 percent, its cost of capital

Question:

Great Munchies (GM) Corporation has a variable operating cost ratio of 60 percent, its cost of capital is 12 percent, and current sales are $100,000. All of its sales are on credit, and it currently sells on terms of net 30. Its accounts receivable balance is $20,000. GM is considering a new credit policy with terms of net 45. Under the new policy, sales will increase to $120,000, and accounts receivable will rise to $30,000. Compute the days sales outstanding (DSO) under the existing policy and the proposed policy.

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... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...

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