+1-415-670-9189
info@expertsmind.com
Reduction in profit contribution from decline in sales
Course:- Financial Management
Reference No.:- EM13942988




Assignment Help
Expertsmind Rated 4.9 / 5 based on 47215 reviews.
Review Site
Assignment Help >> Financial Management

A company is considering shortening its credit period from 30 days to 20 days and believes as a result of its change, its average collection period will decrease from 36 days to 30 days. Bad debt expenses are also expected to decrease from 1.2 percent to .8 percent of sales. the firm is currently selling 300,000 units but believes as a result of the change that sales will decline to 275,000 units. On 300,000 units the sales revenue is $4,200,000, variable costs total $3,300,000 and fixed costs are 300,000. The firm has a required return on similar risk investments of 15%. what is the reduction in profit contribution from decline in sales under the proposed plan?




Put your comment
 
Minimize


Ask Question & Get Answers from Experts
Browse some more (Financial Management) Materials
Ballack Co.’s common stock currently sells for $49.00 per share. The growth rate is a constant 11.2%, and the company has an expected dividend yield of 6%. The expected long-r
Which of the following facts explains why the standard deviation of the portfolio is less than the standard deviation of either of the two stocks that make up the portfolio?
Aberdeen Company has the following capital structure. The risk-free rate is 5% and the expected return on the market is 12%. The tax rate of Aberdeen is 32%. Find the WACC of
A company has $317,000 in credit sales. The company uses the allowance method to account for uncollectible accounts, and the Allowance for Doubtful Accounts now was an $8,150
Bond P is a premium bond that carries a 10% coupon rate. A separate bond-Bond D is a discount bond and has a 4% coupon rate. Each of these bonds makes an annual payment (not s
Do problem 1 over again, this time assuming more realistically that a swap bank is involved as an intermediary. Assume the swap bank is quoting five-year dollar interest rate
Rancco reported total sales of $73 million last year including $13 million in revenue (labor, sales to tax-exempt entities) exempt from sales tax. the company collects sales t
Bernie Madeoff pays $250,000 for a new four-door bedroom 2,400-square-foot home outside Tonopah, Nevada. He plans to make a 20% down payment, but is having trouble deciding wh