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's present credit terms are 1/10 net 30 that they are planning to change to 2/10 net 30. The current average collection period is 20 days and the variable cost to sales ratio is 85 and the cost of capital is 10%. The proportion of sales on that customers now take discount is .5. After relaxation of discount terms this is assumed that the ACP will decrease to 14 days, sales will rise from Rs.80 lakhs to Rs 85 lakhs and the proportion of discount sales will rise to .8. Tax rate for the firm is 40% compute the effect of above modifications on net profit.
Solution:
? I = (ACPn - ACP0) [S0/360] + V(ACPn)( ?S/360)
? I = 80/360 (20 - 14) - .85 × 5/360 × 14
= 1.1680555 lakhs
? DIS = Pn (S0+ ? S) dn - P0S0d0
= .96 lakhs
? NP = ? S (1 - v) - ? DIS] (1 - t) + k ?I
= [5 (1 - .85) - .96] (1 - .4) + .1 ×1.1680555
= (.75 - .96) (.6) + .116805555
= - .126 + .11680555
= - .009194 lakhs
As the increase in net profit is negative the cash discount policy must not be liberalized.
Kibble Company had the following functional income statement for the month of July 2011: Kibble Company Functional Income Statement For the Month Ending July 31, 2011 Sales ($40 x
Price sensitivity Nagle has identified nine factors that contribute to price sensitivity and has also presents various methods or techniques to measure it. The factors that con
Manufacturing cost data for Sassafras Company, which uses a job order cost system, are presented below. Indicate the missing amount for each letter. Assume that in all cases manufa
The collection policy of a firm is intend at timely collection of overdue amount and comprises of the subsequent. a. Monitoring the state of debtors (account receivable)
What are the Advantages of cost accounting: 1. Cost accounting as an aid to management: cost accounting helps the management in carrying out of its functions, planning, organ
500 000 debentures are in a company at a coupon value of R50 each in issue. During each financial year, interest on these debentures is paid in arrears and in equal quarterly inst
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
stanley shoe company established a line credit with a local bank. the maximum amount that can be borrowed under the terms of the agreement is $100000 at an annual rate of 12%. a co
Important steps of budgetary control There are certain steps which are essential for the successful implementation of a budgetary control system. They are as follows: 1) Or
MAKE OR BUY DECISIONS UNDER LIMITING FACTORS One reason for buying products/services from another organisation is the scarcity of resources, so that the company may be unable t
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