Pooja Sales has an annual turnover of Rs.2400000. Goods are sold to customers on 60 days...

 

Transcribed Image Text:

Pooja Sales has an annual turnover of Rs.2400000. Goods are sold to customers on 60 days credit. The company is considering the following alternatives to better manage its accounts receivables: Proposal 1 Offer a cash discount of 0.75% if payment is made within 20 days. In this case about 50% of debtors in terms of value are expected to avail of this facility Proposal 2 Offer a cash discount of 1% if payment is made within 30 days. In this case about 75% of debtors in terms of value are expected to avail of the facility Proposal 3 Offer a cash discount of 1.25% if payment is made within 40 days. In case of this alternative all the debtors are expected to avail this facility. Pooja Sales have an Overdraft facility with their bankers who charge interest @ 15% p.a. on the amount overdrawn. As the credit manager of Pooja sales decide the Policy to be adopted. Pooja Sales has an annual turnover of Rs.2400000. Goods are sold to customers on 60 days credit. The company is considering the following alternatives to better manage its accounts receivables: Proposal 1 Offer a cash discount of 0.75% if payment is made within 20 days. In this case about 50% of debtors in terms of value are expected to avail of this facility Proposal 2 Offer a cash discount of 1% if payment is made within 30 days. In this case about 75% of debtors in terms of value are expected to avail of the facility Proposal 3 Offer a cash discount of 1.25% if payment is made within 40 days. In case of this alternative all the debtors are expected to avail this facility. Pooja Sales have an Overdraft facility with their bankers who charge interest @ 15% p.a. on the amount overdrawn. As the credit manager of Pooja sales decide the Policy to be adopted.

Answer rating: 100% (QA)

1 2 3 4 Final answer The three proposals are analyzed in the follow... View the full answer