Last year, Pastis Productions reported $100,000 in sales and $40,000 in cost of goods sold. Thecompany estimates it would have doubled its sales and cost of goods sold had it allowed customersto buy on credit, but it also would have incurred $50,000 in additional expenses relating to wages,bad debts, and interest. Should Pastis Productions extend credit?

Last year, Pastis Productions reported $100,000 in sales and $40,000 in cost of goods sold. Thecompany estimates it would have doubled its sales and cost of goods sold had it allowed customersto buy on credit, but it also would have incurred $50,000 in additional expenses relating to wages,bad debts, and interest. Should Pastis Productions extend credit?

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter16: Supply Chains And Working Capital Management

Section: Chapter Questions

Problem 11P

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