Compute the days sales outstanding

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Reference no: EM131393822

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.

Reference no: EM131393822

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