What are working capital risks involved in given both offers

Reference no: EM13925040

ABC Ltd has offers from two suppliers (a) XY Co. quotes $60m on cash on delivery basis while (b) PQ Co. quotes $60.2m and offers three months' credit for 90% of the amount with $6m (c.10%) down payment on delivery. ABC Ltd is confident of selling the goods for a net profit of circa 5% or $3m. However, given the competition in the market ABC Ltd should extend four months' credit to its clients.

Identify (i) which of the above two alternatives (i.e. offers) require more NWC and (ii) what are the working capital risks involved in both offers?

Reference no: EM13925040

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What are working capital risks involved in given both offers : Identify (i) which of the above two alternatives (i.e. offers) require more NWC and (ii) what are the working capital risks involved in both offers?

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