Calculations related to the existing credit policies. With existing credit terms, revenue is $ 1,000,000. If credit terms were relaxed, revenue would increase by 10 %. Profit before bad debts is estimated at 10 % of revenue. With existing credit terms, bad debts is .5 % of profit before bad debts and with new credit terms, bad debts would increase to 1.0 %. If the new credit terms were applied, trade receivables would increase from $200,000 to $240,000
-Bad debts are $ ________________________ .

Question

Quizplus · Accepted Answer

The Answer of Calculations related to the existing credit policies. With existing credit terms, revenue is $ 1,000,000. If credit terms were relaxed, revenue would increase by 10 %. Profit before bad debts is estimated at 10 % of revenue. With existing credit terms, bad debts is .5 % of profit before bad debts and with new credit terms, bad debts would increase to 1.0 %. If the new credit terms were applied, trade receivables would increase from $200,000 to $240,000
-Bad debts are $ ________________________ .

Calculations Related to the Existing Credit Policies