Question: @ Accounts receivable changes without bad debts Tara's Textiles currently has credt sales of $363 million per year and an average collection period of 55
@ Accounts receivable changes without bad debts Tara's Textiles currently has credt sales of $363 million per year and an average collection period of 55 days Assume that the price of Tara's products.is $60 per unit and that the variable costs are $55 per unit. The firm is considering an accounts receivable change that will result in a 20.4% increase in sales and a 19.9% increase in the average collection period. No change in bad debts is expected. The firm's equal risk opportunity cost on its Investment in accounts receivable is 14.4%. (Note: Use a 365-day year) a. Calculate the additional profit contribution from now sales that the firm will realize if it makes the proposed change b. What marginal investment in accounts receivable will result c. Calculate the cost of the marginal investment in accounts receivable d. Should the firm implement the proposed change? What other information would be helpful in your analysis? a. The additional profit contribution from the increase in sale units is Round to the nearest dollar) Enter your answer in the answer box and then click Check
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