Hhow much will recievables balance increase what would be

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The new credit manager of Kays Dpartment store plans to liberalize the firms credit policy.The firm currently generates credit sales of $575,000 annually. te more lenient the credit policy is expected to produce credit sales of $750,000. The bad debt losses on additional sales are projected to be 5% despit any additional $15,000 collection expenditure.The new manager anticipates production and selling costs other than additional bad debt and collection expenses will remain at the 85% level. The firm is in the 34%tax bracket.if the firm maintains its recievables turnover 10 times, how much will the recievables balance increase,what would be Kays incremental after tax return on investment? Assuming additional inventory of $35,000 is required to support the additional sales, compute the after tax return on investment.

Reference no: EM13478571

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