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Explain the credit and collection policy

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Garcia Industries has sales of $165,000 and accounts receivable of $15,820, and it gives its customers 35 days to pay. The industry average DSO is 28 days, based on a 365-day year. If the company changes its credit and collection policy sufficiently to cause its DSO to fall to the industry average, and if it earns 9.0% on any cash freed up by this change, how would that affect its net income, assuming other things are held constant? Assume all sales to be on credit. Do not round your intermediate calculations.

Reference no: EM133114419

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