Relaxation of credit standards

Assignment Help Financial Management

Reference no: EM131456572

Relaxation of credit standards

Lewis Enterprises is considering relaxing its credit standards to increase its currently sagging sales. As a result of the proposed? relaxation, sales are expected to increase by 10?% from 13,000 to 14,300 units during the coming? year; the average collection period is expected to increase from 45 to 65 days; and bad debts are expected to increase from 11?% to 33?% of sales. The sale price per unit is $40?, and the variable cost per unit is $31. The? firm's required return on? equal-risk investments is 25.3?%. Evaluate the proposed? relaxation, and make a recommendation to the firm. ?(?Note: Assume a? 365-day year.)

The additional profit contribution from an increase in sales is ?$__________

Reference no: EM131456572

Questions Cloud

About the lockbox system : What amount of cash will be made available for other uses under the lockbox? system?

What is hr strategic planning to achieve the companys goal : What is HR strategic planning and strategies to achieve the organizational goals?What are the training programs needed to develop the employees?

Compute the sample mean and sample standard deviation : Joans Nursery specializes in custom-designed landscaping for residential areas. The estimated labor cost associated with a particular landscaping proposal.

How your liveplan business plan has evolved over time : Explain how your LivePlan business plan has evolved over time. Provide an analysis of the following areas: Management, Marketing, and Finance.

Relaxation of credit standards : Evaluate the proposed? relaxation, and make a recommendation to the firm. The additional profit contribution from an increase in sales

In which the role of ethics in managerial accounting differs : Suggest one key way in which the role of ethics in managerial accounting differs from the role of ethics in financial accounting.

How many shares of stock can the firm repurchase : Approximately how many shares of stock can the firm repurchase at the $25?-per-share ?price, using the funds that would have gone to pay the cash? dividend?

Watch the video - utilizing healthcare databasescreated : There are numerous searchable databases that utilize information hospitals and physician offices have collected and reported via the various data sets .

Contrast differences between stock dividend and stock split : Contrast the differences between a stock dividend and a stock split.

User Account

All Pages