Computations to explain if the change in policy

Assignment Help Finance Basics
Reference no: EM1353468

The Kranberry kids Kompany is in the volatile garment business. The firm has annual revenues of $250 million and operates with a 30% gross margin on sales. Bad debt losses average 3% of revenues. Kramberry is contemplating an easing of its credit policy in an attempt to increase sales. The loosening would involve accepting a lower-quality customer for credit sales. It is estimated that sales could be increased by $20 million a year in this manner with an increase in inventory investment of $2,000,000. Opportunity costs for inventory is 15%. However, the collections department estimates that bad debt losses on the new business would rum four times the normal level, and that internal collection efforts would cost an additional $ 1 million a year.
Show computations to explain if the change in policy should be made.

Reference no: EM1353468

Questions Cloud

Lifespan development and personality paper : What factors affect social, moral, and personality development? Describe the factors by explaining at least two theoretical perspectives associated with moral, social, and personality development.
What a man needs to help provide a college education : What a man needs to help provide a college education for his young daughter. He can afford to invest $800/yr for the next four years, beginning on the girl's fourth birthday.
Calculate the x component of the velocity : What is the greatest distance foot of the ladder can be placed from the base of the wall without the ladder immediately slipping.
Difficult in healthcare organizations : What are some ways strategic managers could make culture change easier - Why is culture change so difficult in healthcare organizations
Computations to explain if the change in policy : The Kranberry kids Corporation is in the volatile garment business. The company has yearly revenues of $250 million and operates with a 30 percent gross margin on sales.
Find average number of books borrowed per member : Find the average number of books borrowed per member. Take into account that if a member does not borrow any books, then that member does not appear in the borrowed relation at all.
Illustrate what is the market elasticity of demand : Illustrate what is the market elasticity of demand. What is your elasticity of demand in this Cournot oligopoly.
Person personality determining genetically : If we were to say that a person's personality is determined genetically, would it matter what environment surrounded that person?
Explain the levels of corporate culture : Levels of Corporate Culture - Explain the three levels of corporate culture.

Reviews

Write a Review

Finance Basics Questions & Answers

  Find the portfolio weights

Assumee the market portfolio has an expected return of 10% and a volatility of 20%, while Microsoft's stock has a volatility of 30 percent.

  Concept of economic risk

How do you describe the concept of economic risk in context of global business?

  Computation of net present value

Computation of Net present Value of the project and the decision making and what is the meaning of the computed net present value figure

  A life insurance policy with the taxable value

A life insurance policy with the taxable value of= $450 or a non-taxable increase in health insurance coverage valued at= $340.

  Explain role of market efficiency in underpricing theories

One method utilized by corporation to obtain the long-term capital necessary to run & grow their businesses is by providing the general public with the option to buy stocks.

  Firm''s operating as well as cash conversion cycles

Firm's operating as well as cash conversion cycles and decision on speeding up collections

  Computation the investment for each year

Computation the investment for each year and wants to invest equally amounts at the end of each year for the next 6 years to accumulate

  Company dividend policy

Present your own company's dividend policy or research a publicly-held company's dividend policy and summarize your findings. Include whether the company has changed its policy in the last few years.

  Calculate the return if the bank compounds annually

Assume you deposit $2,000 for 5 years at a rate of 8 percent. Calculate the return (A) if the bank compounds annually (n=1) Round answer to the hundreths place.

  Methods of using stocks and options

Determine two to three (2-3) methods of using stocks and options to create a risk-free hedge portfolio can be created. Support your answer with examples of these methods being used to create a risk-free hedge portfolio.

  Redeemable preferred stock

In the recent discussion memorandum, Distinguishing between Liability and Equity Instruments and Accounting for Instruments with the Characteristics of Both, the FASB addressed issue of whether redeemable preferred stock is debt or equity.

  How to add stockholders wealth during 2012

Find how much value did management add to stockholders' wealth during 2012? Write out your answer completely.

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