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.
) Allgood Inc. has fixed costs of $480,000. It has a unit selling price of $6, unit variable cost of $4.50, and a target net income of $1,500,000. HOW TO COMPUTE
Advantages of incremental budgeting a) The budget is stable and change is gradual b) Managers can operate their departments on a steady basis c) The system is relatively
explain strategy asa an organisational process
Given the persistent problem with starvation in some parts of the world, and the anticipated population growth in developing nations, do we need genetically modified foods? Is it r
Q. Show the process of Pricing during introduction? Pricing during introduction: in pricing a new product generally two kinds of strategies are suggested viz. a) Skimming p
Conduct a time series analysis base on the three years accounting ratios
ABC System and service organizations The ABC system has been taken up as applied to a manufacturing organizations with the same efficiency. One basic characteristic of service
What is Budgetary control Budgetary control is the process of determining various budgeted figures for the enterprises for the future period and then comparing the budgeted fi
In the earlier unit, we have studied how firms determine their requirements for current assets and manage their holdings in cash and marketable securities. Inside a classical manuf
Loan Syndication : There are two ways of syndication as: direct lending and through participation. - Direct Lending: regarding "direct lending" all the lenders sign the loa
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