2B5U COMPUTER SERVICES IS AN ESTABLISHED FIRM THAT SELLS COMPUTER HAR...
157.
CSO: 2B5d
LOS: 2B5u
Computer Services is an established firm that sells computer hardware, software and
services. The firm is considering a change in its credit policy. It has been determined
that such a change would not change the payment patterns of the current customers. To
determine whether such a change would be beneficial, the firm has identified the
proposed new credit terms, the expected additional sales, the expected contribution
margin on the sales, the expected bad debt losses, and the investment in additional
receivables and the period of the investment. What additional information, if any, does
the firm require to determine the profitability of the proposed new policy as compared to
the current credit policy?
a.
The credit standards that presently exist.
b.
The new credit standards.
c.
The opportunity cost of funds.
d.
No additional information is needed.