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Expected profit under the proposed credit standards

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Tom's Toys is currently expecting a bad debt ratio of 6%. Tom is convinced that with tighter credit control, he can reduce this ratio to 2%; however, he expects sales to drop by 8% as a result. The cost of goods sold is 75% of the selling price. Per $100 of current sales, what is Tom's expected profit under the proposed credit standards.

Reference no: EM131044630

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