| Baker College | Undergraduate, ( x ()Course Modules: Financial Analy: X Question 8 - M& CONNECT Prob X * Course Hero * + X C https://ezto.mheducation.com/ext/map/index.html?_con=con&external_browser=0&launchUrl=https%253A%252F%252Fims.mheducation.com%252Fmghmiddleware%252Fmheproducts%252FImsCloseWindow.htm#/activity/question-group/... A" to ... M8 CONNECT Problems Saved Help Save & Exit Submit Check my work mode : This shows what is correct or Incorrect for the work you have completed so far. It does not Indicate completion. +. Return to question 8 Galenic Inc. is a wholesaler for a range of pharmaceutical products. Before deducting any losses from bad debts, Galenic operates on a profit margin of 6%. For a long time the firm has employed a numerical credit-scoring system based on a small number of key ratios. This has resulted in a bad debt ratio of 1.00%. 5 points Galenic has recently commissioned a detailed statistical study of the payment record of its customers over the past 6 years and, after considerable experimentation, has identified five variables that could form the basis of a new credit-scoring system. On the evidence of the past 8 years, Galenic calculates that for every 10,000 accounts it would have experienced the following default rates: + Number of Accounts Credit Score under Proposed System Defaulting Paying Total Better than 80 60 9,106 9, 160 Worse than 80 40 800 840 Total 100 9,900 10, 000 By refusing credit to firms with a poor credit score (worse than 80), Galenic calculates that it would reduce its bad debt ratio to 60 / 9,160, or just under 0.60%. While this may not seem like a big deal, Galenic's credit manager reasons that this is equivalent to a decrease of one-fifth in the bad debt ratio and would result in a significant improvement in the profit margin. a. What Is Galenic's current profit margin, allowing for bad debts? (Round your answer to 2 decimal places.) Answer is complete and correct. Net profit margin 5.009% b. Assuming that the firm's estimates of default rates are right, what would the profit per $100 of original sales be under the new credit- scoring system? (Do not round Intermediate calculations. Round your answer to 2 decimal places.) x Answer is not complete. Profit Activate Windows Sunnose that one of the variables in the proposed new scoring system is whether the customer has an existing account with Go to Settings to activate Windows. Mc Hill 503 2:28 PM Type here to search O 76.F Partly sunny ~ 9: ( 8/11/2022 53