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.
Determine the Zero bases budgeting According to Leonard mere According to Leonard mere, ZBB is a technique which complements and links the existing planning budgeting and revi
Project C would involve a current outlay of $50,000 on equipment and $15,000 on working capital. The investment in working capital would be increased to $21,000 at the end of the f
Explain Skimming pricing It is one of the most commonly discussed pricing method is the skimming pricing. This pricing method to the firm's desires to skim the market by sellin
Definition of Cost reduction Cost reduction is planned positive approach to reducing expenditure. Cost reduction exercises are planned campaigns to cut expenditure. It is a con
Steady state condition In many cases, the Markov process will converge to a steady state or equilibrium. In general, as number of transitions `n' increase, the state values
Factoring Services: All subsequent services are offer through the factor apart from the core service of purchasing receivables. 1) Sales credit management and Ledger adminis
Battle of the Sexes game To understand Battle of the Sexes game, let’s consider a story as follows: Two players (a couple) wish to go to an event together but disagree about
Strategy A business characteristically invests considerable time and money in developing or creating its strategy. Employees, harried with day-to-day tasks, sometimes fail to s
yolande tzar came to norethen ireland
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 rat
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