Computation of ebit, The factoring department of Inter

Computation of ebit

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Reference no: EM1360937

The factoring department of Inter American Bank (IAB) is processing 100,000 invoices per year with an average invoice value of $1,500. IAB buys the account receivables at 3.5 percent off the invoice value. Currently, 2.5 percent of the accounts receivable turns out to be bad debt. The annual operating expense of this department is $400,000. What are the EBIT for the factoring department of IAB?

Reference no: EM1360937

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Computation of ebit : The factoring department of Inter American Bank is processing 100,000 invoices each year with an average invoice price of $1,500. IAB buys the account receivables at 3.5% off the invoice value.

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