Question: Please help please Edgenta Bhd. is a trading company. Given below is some information based on the last financial year. In order to encourage customers

Please help please

Please help please Edgenta Bhd. is a trading company. Given below issome information based on the last financial year. In order to encourage

Edgenta Bhd. is a trading company. Given below is some information based on the last financial year. In order to encourage customers to pay on time, Edgenta proposes introducing an early settlement discount of \1 for payment within 30 days, while increasing its normal credit period to 45 days. It is expected that, on average, \60 of customers will take the discount and pay within 30 days, \30 of customers will pay within 45 day and \10 of customers will not change their current behavior. The company has an overdraft facility charging interest of \7 per year. Edgenta Bhd. uses a working year consisting of 365 days. The industry cash conversion cycle and receivables collection period are 50 days and 45 days respectively. Required: a. Calculate the cash conversion cycle of Edgenta Bhd. and comment briefly on the result. b. Calculate the net benefit or cost of the proposed changes in the trade receivables policy and comment on your findings

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