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!
The current sales of M/s ABC are Rs.100 lakhs. Through relaxing the credit standards the firm can produce additional sales of Rs.15 lakhs on that bad debt losses would be 10 percent. The variable cost for the firm is, 80 percent average collection period ACP is 40 days and post tax cost of funds is 10 % and the tax rate applicable to the firm is 40%. Determine whether the firm must relax credit standards or not?
Solution:
? NP = [ ? S (1-V) - ? S bn] (1-t) - k ? I
? NP = [15 (1-.80) - 15 × .1] (1-.4) -.10 × (15/360) × 40 ×.80
= [3 -1.5] (.6) -.1333
=.9 -.1333
=.7667 × 1,00,000
=76,667
As the impact of change in credit standards outcomes in a positive change in total profits thus the proposed change must be accepted.
Explain TWO limitations of using accounting ratios to assess the performance of a firm and suggest how each limitation may be improved
JIT purchasing arrangements JIT philosophy also extends to adapting JIT purchasing techniques whereby delivery of material immediately precedes their use. By arranging with sup
assignments
Current ratio Meaning: this ratio establishes a relationship among current assets and current liabilities. Objective: the objective of computing these ratios is to calcu
The current sales of M/s ABC are Rs.100 lakhs. Through relaxing the credit standards the firm can produce additional sales of Rs.15 lakhs on that bad debt losses would be 10 percen
LEARNING CURVE THEORY The first time a new operation is performed both workers and operating procedures are untried but as the operation is replaced the workers becomes more fa
Procedure of material acquisition A stores record is maintained into which the quantity and value of materials received is entered. Issues of materials to production are made b
Time sheets are collected in a batch, and the information is manually keyed into the system. This data is now stored on a magnetic disk. An editing program is run, which verifies w
Carrying costs of inventory These are costs incurred because the firm has decided to maintain inventories. They generally consist of: • Stock-out costs • Insurance co
Controlling Things hardly go exactly as planned, and management should make a concerted effort to the monitor and adjust for their deviations. The managerial accountant is the
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: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd