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As treasurer of the Dragon Corporation, Henry Lee is worried about his bad debt ratio,...

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Accounting

As treasurer of the Dragon Corporation, Henry Lee is worried about his bad debt ratio, which is currently running at 7%. The company currently has $40 million in sales. He believes that imposing a more stringent credit policy might reduce sales by 10% and reduce the bad debt ratio to 3%. If the cost of goods sold is 70% of the selling price, should Mr. Lee adopt the more stringent policy?

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