CENGAGE | MINDTAP Ch 15: Assignment - Working Capital Management Effective credit management Involves establishing credit standards for extending credit to customers, determining the company's credit terms, and setting up procedures for invoicing and collecting past-due accounts. The following statement refers to a credit management policy. Select the best term to complete the sentence. The minimum financial strength a customer must have to be granted credit is indicated by the company's credit terms V Consider the case of Mammoth Pictures Inc. : Mammoth Pictures Inc.'s CFO has decided to take a closer look at the company's credit policy. Mammoth Pictures Inc. has annual sales of $396.3 million, and it currently has an accounts receivable balance of $45.9 million. The first step in analyzing the firm's credit policy is to determine its days sales outstanding (DSO). Based on this information, Mammoth Pictures Inc.'s DSO is . (Note: Use 365 days as the length of a year in all calculations.) The average DSO for Mammoth Pictures Inc.'s industry is 54.1 days. Assuming that its sales stayed the same, what would be Mammoth Pictures Inc.'s receivables balance if it maintained the industry average DSO? Mammoth Pictures Inc.'s CFO thinks that the company has not done a very good job of enforcing its credit policy. The CFO believes that if the company were to better enforce its credit policy, it would reduce its DSO to 30 days; however, this will cause Mammoth Pictures Inc. to lose 7% of its sales revenue. What would Mammoth Pictures Inc.'s expected accounts receivables balance be if it decides to tighten its credit policy? O $31,807,125 O $34,836,375 $28,777,875 $30.292 500