GT Ltd. is taking into account the revision of its credit policy with a view to...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
GT Ltd. is taking into account the revision of its credit policy with a view to increasing its sales and profit. Currently, all its sales are on one month credit. Other information is as follows: Contribution 2/5th of Sales Revenue Additional funds raising cost 20% per annum The marketing manager of the company has given the following options along with estimates for considerations: Particulars Sales Revenue (*) Credit period (in months) Current Position Option I Option II Option III 42,00,000 44,00,000 50,00,000 1½ 2 3 2½ 3 26,000 30,000 40,00,000 1 2 24,000 Bad debts (% of sales) Cost of Credit administration () You are required to ADVISE the company for the best option. 5 60,000 [10 Marks] GT Ltd. is taking into account the revision of its credit policy with a view to increasing its sales and profit. Currently, all its sales are on one month credit. Other information is as follows: Contribution 2/5th of Sales Revenue Additional funds raising cost 20% per annum The marketing manager of the company has given the following options along with estimates for considerations: Particulars Sales Revenue (*) Credit period (in months) Current Position Option I Option II Option III 42,00,000 44,00,000 50,00,000 1½ 2 3 2½ 3 26,000 30,000 40,00,000 1 2 24,000 Bad debts (% of sales) Cost of Credit administration () You are required to ADVISE the company for the best option. 5 60,000 [10 Marks]
Expert Answer:
Answer rating: 100% (QA)
To advise GT Ltd on the best option for revising its credit policy we need to calculate the incremen... View the full answer
Related Book For
Financial Accounting and Reporting
ISBN: 978-0273744443
14th Edition
Authors: Barry Elliott, Jamie Elliott
Posted Date:
Students also viewed these finance questions
-
Taking into account the motion of the nucleus of a hydrogen atom, find the expressions for the electron's binding energy in the ground state and for the Rydberg constant. How much (in per cent) do...
-
Taking into account the availability of today's powerful computers, why is programming efficiency important? Conversely, when might program efficiency be really critical? Include, in your discussion,...
-
Taking into account the pathway for phenylalanine degradation, answer the following questions: a. What coenzyme and what other organic compound are needed by tyrosine aminotransferase? b. What bond...
-
Gavin wrote the equation p=(3(s+100))/(4) to represent p, the profit he makes from s sales in his lawn -mowing business. Which equation is solved for s?
-
LOreal wanted to introduce a hair cosmetic product that gave hair a blue, green, or other vivid-color tint. LOreal wanted to market the product under the name Zazu and began to investigate the...
-
Julio sold his corporation to a competitor, Exeter LLC, for $100,000,000. Julio incorporated his business 17 years ago by investing $500,000 plus his proprietary know-how. There have been no other...
-
Explain the significance of components in the context of object-oriented development.
-
Montel Companys July sales budget calls for sales of $600,000. The store expects to begin July with $50,000 of inventory and to end the month with $40,000 of inventory. Gross margin is typically 40%...
-
Evaluate the definite integral (11 sin a) da exactly, using the Fundamental Theorem, then evaluate the same integral approximately. NOTE: Round the approximate value to three decimal places. Example:...
-
1. Pick a futures that you are interested in. ie, a commodity (iron, barley, etc), financial futures (index), etc. 2. State the market your research is based on ie, ASX, CBOE, etc. 3. Put in a price...
-
Three mass-spring systems, each with an identical spring (same stiffness, k) are placed on three different tables where they experience different levels of friction. They undergo damped simple...
-
So, what puts the fast in fast fashion? A behind-the-scenes peek at Zara shows how, say, a womans winter coat can go from a designers sketchpad to store display racks in less than one month. The...
-
Define convergence and give an example.
-
Explain the relationship between supply chain and logistics management.
-
Discuss some of the key considerations in selecting an advertising agency.
-
Identify current trends in global e-commerce and explain how global companies are expanding their presence on the Web.
-
4. Determine the area of the hyperbolic triangles having the following angle measures if k = 1800: (i) mLA = 60, mLB = 60, m/C = 58.5 (ii) mLA = 40, mLB = 40, mLC = 70 (iii) mLA = 20, mLB = 30, mLC =...
-
Planning: Creating an Audience Profile; Collaboration: Team Projects. Compare the Facebook pages of three companies in the same industry. Analyze the content on all available tabs. What can you...
-
On 1 January 20X0 Hill plc purchased 70% of the ordinary shares of Valley plc for £1.3 million. The fair value of the non-controlling interest at that date was £0.5 million. At the date...
-
Cryptic plc extracted its trial balance on 30 June 20X5 as follows: The following information is relevant: (i) The company discontinued a major activity during the year and replaced it with another....
-
Epsilon is a listed entity. You are the financial controller of the entity and its consolidated financial statements for the year ended 30 September 2008 are being prepared. Your assistant, who has...
-
The materials which exhibit the same elastic properties in all directions are known as: (a) Homogeneous (b) Isotropic (c) Isentropic (d) Inelastic
-
Curtis turbine is: (a) Simple impulse turbine (b) Simple reaction turbine (c) Pressure compounded turbine (d) Velocity compounded turbine
-
In a reaction steam turbine, steam expands: (a) In nozzle only (b) In moving blades only (c) Partly in nozzle partly in blades (d) None of the above
Study smarter with the SolutionInn App