(1 MARK) A. RAM IS CONSIDERING CHANGING ITS CREDIT POLICY...

5. (1 mark)

a. RAM is considering changing its credit policy. This change implies ending accounts

receivable would represent 90 days of sales. What is the impact of this policy change on

RAM’s current cash position? Will the company be required to borrow?

b. RAM is considering a change to a 120-day collection period based on ending accounts

receivable. What is the effect(s) of this change on its cash position?

c. Suppliers are considering changing their policy of extending credit to RAM to require

payment on purchases within 60 days; there would be no change in RAM’s collection period.

What is the effect(s) of this change on its cash position?