I need help with my finance homework

Posted on 2014-01-23 15:31:00 in Finance by CUBS RULE

I am in finance and I need help with a question. The question is:



Aziz industries has sales of $100,000 and accounts receivable of $11,500, and it gives its customers 30 days to pay. The industry average days sales outstanding is 27 days. If the company changes its credit and collection policy sufficiently to cause its days sales outstanding to fall to the industry average, and if it earns 8% on any cash freed up by this change, how would that affect its net income, assuming other things are help constant.



A. $267.34

B. $281.41

C. $296.22

D. $311.81

E. $328.22



Please explain how you got the answer. Thank you for your help.

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