Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
M/s ABC has an existing sales of Rs.50 lakhs and permits a credit period of 30 days to its customers. The firm cost of capital is 10% and the ratio of variable cost to sales is 85. The firm is contemplating on rising the credit period to 60 days that would result in raised sales of Rs.5 lakhs. The bad debts on raised sales are expected to be 8%. The tax rate for M/s ABC is 40 percent. Must the firm extend the credit period?
Solution
? I = (ACPn - ACP0) [S0/360] + V(ACPn)( ?S/360)
? I = (60 - 30) [50/360] + 8.5 × 60 × 5/360
? I = (30) × 50/360 + .708333
?I = 4.8749997 × 1, 00,000
= 4, 87,500
= 4, 874,99.9
?NP = [ ?S (1 - V ) - ? Sbn ] (1 - t ) - k?I
= [5 (015 ) - 5 × .08 ] (1 - 04 ) - .10 × 4,87 ,500
= [.75 - .4] (.6) - 4.875000
= (.35 ) (-6) - .48750
= (.21 - .48750 ) × 1,00 ,000
= - 27 ,750
The raise in credit period results in a negative net profit thus the credit period must not be extended.
Explain the main purpose of cost centre The main purpose of cost centre is two fields. 1. Recovery of cost: costs are collected, classified into two field in respect of
According to the Philadelphia Inquirer, in 2004 the city of Philadelphia planned to spend $14 million to convert the Convention Center into an appropriate venue for the Republican
In the current corporate world, this is a common practice of companies along with surplus cash to lend to another company for a short period generally ranging from 60 days to 180 d
Identification of decision packages - Zero base budgeting Each manager should break down his decision unit into smaller decision packages. Top manager may lay down the minimum
2. Draw the network diagram for the following problem and indicate a sequence of plans that the company should want to consider in making a time-cost tradeoff. The company is not
explain strategy asa an organisational process
Characteristics of cost reduction 1) Cost reduction must be real : said through increase in productivity change in product design improvement in technology etc. 2) Cost r
Question: (a) (I) The following equations relate to the market conditions for pullovers at a given point of time: Demand Function: Q d = 1200 - P Supply Function: Q s
we want to realize our job dreams, we need to think about ourselves as products to be marketed, and in order to do this, we need to contextualize ourselves within the five Ps of ma
using the operating cycle and any financial management knowledge discuss the applicability of such cycle to poultry business in Uganda (consider broilers)
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!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd