A company with export sales of $480m pa has an average collection period of 3 months,...

 

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A company with export sales of $480m pa has an average collection period of 3 months, bad debts are 2%. A factoring company will provide non-recourse factoring for a fee of 5% of revenue. As a result of this, administration savings will be made of £8m p.a. and the credit period will fall to 2 months. The company has a cost of capital of 10%, and the exchange rate is currently 2 $/£. Required Assess, in £s, whether the factor should be used. A company with export sales of $480m pa has an average collection period of 3 months, bad debts are 2%. A factoring company will provide non-recourse factoring for a fee of 5% of revenue. As a result of this, administration savings will be made of £8m p.a. and the credit period will fall to 2 months. The company has a cost of capital of 10%, and the exchange rate is currently 2 $/£. Required Assess, in £s, whether the factor should be used. A company with export sales of $480m pa has an average collection period of 3 months, bad debts are 2%. A factoring company will provide non-recourse factoring for a fee of 5% of revenue. As a result of this, administration savings will be made of £8m p.a. and the credit period will fall to 2 months. The company has a cost of capital of 10%, and the exchange rate is currently 2 $/£. Required Assess, in £s, whether the factor should be used. A company with export sales of $480m pa has an average collection period of 3 months, bad debts are 2%. A factoring company will provide non-recourse factoring for a fee of 5% of revenue. As a result of this, administration savings will be made of £8m p.a. and the credit period will fall to 2 months. The company has a cost of capital of 10%, and the exchange rate is currently 2 $/£. Required Assess, in £s, whether the factor should be used.

Answer rating: 100% (QA)

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