Explain optimum credit policy

Assignment Help Finance Basics
Reference no: EM133115060

How would you define the term Optimum Credit Policy? Also explain the terms Credit Standards, and Ageing Analysis. (10 SelWel Lid currently offers credit terms of 2/10 net 45 to customers. Last year SelWel clocked sales of Rs 200 cr. Average Collection Period (ACP) was 25 days, Variable cost ratio is 65%, and fixed cost is Rs 15 cr. 25% of the customers paid up e get benefit of the cash discount. The CEO has asked the Sales team to take aggressive sales targets next year. The Sales Manager of SelWel has estimate by offering higher discount terms of 3/10 net 45, sales will increase by 20%, ACP will reduce by 7 days, and 60% of custom will go in for cash discount. Tax rate for the company is 30%, and carrying cost of receivables is 14%.

Reference no: EM133115060

Questions Cloud

Prepare the appropriate journal entries : Prepare, in summary form, the appropriate journal entries. The city council approved a budget with revenues estimated to be $800 and expenditures of $785
Create a fund for the purchase of a brand : To create a fund for the purchase of a brand new car, Frances will make equal monthly deposits to a bank that pays [3%, m = 12] for 5 years. If she intends to b
How much is defined benefit cost to recognized in profit : Decrease in benefit obligation due to re-measurements 400,000. How much is defined benefit cost to recognized in profit or loss in 2019
Differences in actions and behaviors : Explain the differences in the actions and behaviors in each of the two examples. What lessons can be learned from the examples?
Explain optimum credit policy : How would you define the term Optimum Credit Policy? Also explain the terms Credit Standards, and Ageing Analysis. (10 SelWel Lid currently offers credit terms
Define the term optimum credit policy : How would you define the term Optimum Credit Policy? Also explain the terms Credit Standards, and Ageing Analysis.
What should be the weight for stock a : Assume that investor I holds a portfolio P consisting of stock A and stock B. Stock A has an expected return of 8% and a standard deviation of 15.1%. Stock B ha
Estimate free cash flow to the firm in 2011 : No Growth Incorporated had operating income before interest and taxes in 2011 of $220 million. The firm was expected to generate this level of operating income
What price per person would the company need to charge : Assume that in March 2021, 400 people attended this event. What price per person would the company need to charge for this March 2021

Reviews

Write a Review

Finance Basics Questions & Answers

  What is the ability-to-pay principle

Equity Which of the two principles of taxation-the benefit principle or the ability-to-pay principle-do you think is more equitable? Explain your answer.

  Events might cause stocks in general to change price

Indicate whether the following events might cause stocks in general to change price, and whether they might cause Big Widget Corp.'s stock to change price. a. The government announces that inflation unexpectedly jumped by 2 percent last month. b. Big..

  Combine tvm tools

On occasion, you'll run into situations where you need to combine TVM tools. Let's take a look at a situation we can all relate to-retirement planning. Suppose you want to retire in 30 years with enough saved to earn $50,000 per year for 25 years.

  Protein concentration be the same or different found

Would protein concentration be the same or different found using OD 280 nm, OD 410 nm, OD 595 nm and why?

  Company cash conversion cycle

Increased Efficiency, Inc. is looking for ways to shorten its cash conversion cycle. It has annual sales of $36,500,000, or $100,000 a day on a 365-day basis.

  Now which project should be chosen

Project X-10 is expected to generate cash flows of $3,250 each year of its 5 year life. The project will cost $11,000.

  What is the straight-debt value of each bond

The firm's common stock is presently selling for $75.00 par per share and it pays a dividend of $3.50. The firm is growing at a constant rate of 8.00%.

  What is the value of the firm according to mm

what would be PP's new value of operations and what is the stock price per share immediately after issuing the debt but prior to the repurchase - What is the value of the firm according to MM with corporate taxes?

  Kinds of transfer

There are three kinds of transfer. Positive, negative and neutral. Can you explain these and perhaps give examples of how one or the other might prevail?

  What is the net profit or loss on the investment

You purchased sixty call option contracts on ABC stock with a strike price of $32.50 when the option price was $1.65 per share.

  Approaches for the benefit of colleagues

How can you define new approaches for the benefit of your colleagues?

  Capital raised into italian

Rierson decideds to invest some of the capital raised into italian 10 year government bonds. a. He decides to invest into ten year 1000 Euro Government bond with 8 % coupon rate and semi annual coupons. If the bond is currently trading for a price..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd