One of SNC's main vendors is Dynasty Enterprises, based in China. Dynasty has offered SNC very...

 

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One of SNC's main vendors is Dynasty Enterprises, based in China. Dynasty has offered SNC very advantageous payment terms: 2/10 net 30. This could reduce 11 SNC's cost of sales by an incremental $200,000 and its accounts payable by an incremental $812,000 depending on choices made in prior phases. SNC uses this opportunity to inquire about renegotiating credit terms with its other suppliers. Most of the suppliers respond favorably, similarly offering a 3% discount for payment within 10 days, as they do not want to lose out on SNC's business. What would you like to do about this opportunity? Accept Decline 2019 2020 2021 Incremental Summary Income Statement ($ in thousands) Change in Sales 50 SO SO -$200 -$200 -$200 Change in Cost of Sales Change in EBIT $200 $200 $200 Incremental Balance Sheet ($ in thousands) Change in Accounts Receivable SO $0 $0 Change in Inventories -$49 -$49 -$49 Change in Accounts Payable -$800 -$800 -$800 Copy to Clipboard One of SNC's main vendors is Dynasty Enterprises, based in China. Dynasty has offered SNC very advantageous payment terms: 2/10 net 30. This could reduce 11 SNC's cost of sales by an incremental $200,000 and its accounts payable by an incremental $812,000 depending on choices made in prior phases. SNC uses this opportunity to inquire about renegotiating credit terms with its other suppliers. Most of the suppliers respond favorably, similarly offering a 3% discount for payment within 10 days, as they do not want to lose out on SNC's business. What would you like to do about this opportunity? Accept Decline 2019 2020 2021 Incremental Summary Income Statement ($ in thousands) Change in Sales 50 SO SO -$200 -$200 -$200 Change in Cost of Sales Change in EBIT $200 $200 $200 Incremental Balance Sheet ($ in thousands) Change in Accounts Receivable SO $0 $0 Change in Inventories -$49 -$49 -$49 Change in Accounts Payable -$800 -$800 -$800 Copy to Clipboard

Answer rating: 100% (QA)

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