The following companies are considering a change in their accounts receivables policy. Required: Determine whether the proposed
Question:
Required:
Determine whether the proposed change in accounts receivables policy is beneficial to any of these companies.
Transcribed Image Text:
Alpha Industries Beta Ltd. Gamma Inc. Current receivables policy Unit sale price Contribution margin per unit Units sold per year on credit Average collection period in days Bad debts per year Interest rate on line of credit $400 $130 75,000 60 $200,000 13% $860 $300 22,000 90 $300,000 9% 190 $90 130,000 100 $400,000 10% Proposed new receivables policy Revised average collection period in days Cost % reduction in unit sales 30 $45,000 5% 60 $100,000 5% 45 $60,000 7%
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 71% (7 reviews)
Alpha and Beta would save money by changing their credit policy for accounts receivable H...View the full answer
Answered By
BRIAN MUSINGA
I possess a Bachelors of Commerce degree(Marketing option) and am currently undertaking an MBA in marketing. I believe that I possess the required knowledge and skills to tutor in the subject named. I have also written numerous research academic papers much to the satisfaction of clients and my professors.
5.00+
2+ Reviews
17+ Question Solved
Related Book For
Financial Management for Decision Makers
ISBN: 978-0138011604
2nd Canadian edition
Authors: Peter Atrill, Paul Hurley
Question Posted:
Students also viewed these Finance questions
-
The following companies are competing in the same industry where the industry norm for the current ratio is 1.6. Required a. Complete the schedule (round to two decimal places). b. Identify the...
-
The following companies are trying to decide whether to change their accounts receivables collection policy. Required: Compute the cost of the current receivables policy for each company. Three...
-
These companies are considering a stock dividend as follows. Required: Calculate the new share price after the stock dividend. B Ltd. DLtd A Ltd. $40.00 C Ltd 90.00 33.00 $22.00 50,000 600,000...
-
For the standard deductions, there are specified contribution tables to be followed as discussed in the previous modules. More examples: 1. Compute for Tita Pau's monthly, semi-monthly, weekly and...
-
Explain whether it would be desirable to have zero unemployment.
-
Consider an isolated wave traveling in a shallow canal. The wave strikes the end of the canal. We have shown that the wave is reflected with only a change in phase. Show that during the impact of the...
-
A fan (see Fig. P5.86) has a bladed rotor of 12 -in. outside diameter and 5-in. inside diameter and runs at \(1725 \mathrm{rpm}\). The width of each rotor blade is \(1 \mathrm{in}\). from blade inlet...
-
Filer manufacturing has 9.6 million shares of common stock outstanding. The current share price is $46, and the book value per share is $4. Filer manufacturing also has two bond issues outstanding....
-
Suppose you observed that one-year T-bills are trading with a yield to maturity (YTM) of 4.75%. The yield spread between AAA and BB rated corporate bonds is 130 basis points. The maturity yield...
-
Brookland Insurance Company (BIC) has a QST with Cypruss Re. The treaty has a $250,000 limit, and a retention of 25%. The following three policies are issued by BIC and are subject to the pro-rata...
-
Your friend has asked you for some advice about investing in corporate bonds. He shows you the following summary based on bond market quotes in the newspaper. All of these bonds currently pay...
-
Intercity Commuters Limited (ICL) flies people between Victoria and Vancouver. Last year an average $100 flight had a $35 contribution margin and $5 fixed costs per customer. Credit sales totalled...
-
Shaquille Corporation has income before tax of $1.2 million and income tax expense of $300,000 for the year ended December 31, 2012, before considering the following items: (1) a $225,000 gain, after...
-
Analyze what procedures your firm would utilize in representating a client in each form?
-
How to revised this words Typically, extended fasts are defined as fasting periods that span full days or exceed 12-16 hours?
-
In the context of allocating support department costs to production departments, the __________ considers all inter-support-department services and is the most difficult to implement when a large...
-
1. Corporate debt has been expanding very dramatically in the last three decades. What has been the impact on interest coverage, particularly since 1977? (LO16-1) 2. What are some specific features...
-
What is your favorite Linux compression utility program? What is your favorite Linux backup utility program?
-
An inventor wants to increase the efficiency of wood-burning stoves by reducing the energy lost through the exhaust stack. He proposes to accomplish this by attaching fins to the outer surface of the...
-
As indicated by mutual fund flows, investors tend to beat the market seek safety invest in last year's winner invest in last years loser
-
Why do you think managers are normally reluctant to make projected financial statements publicly available? Try to think of at least one reason.
-
The above suggests that the per-cent-of-sales method is best suited to a business with at least one of two possible characteristics. What might these be?
-
Prepare a projected statement of financial position for Burrator plc as at the end of Year 9.
-
Reyes Manufacturing Company uses a job order cost system. At the beginning of January, the company had one job in process (Job 201) and one job completed but not yet sold (Job 200). Job 202 was...
-
n-1 3.) Given the discrete sequence x(n) = (3) u(n - 1) where u is the unit step sequence, do the following: (SHOW ALL WORK) a.) Compute the discrete time Fourier Transform (DTFT) X(w) of x(n). b.)...
-
The Cubby Bear started the month with a food inventory of $6,000 in the storeroom. During the month, food purchases totaling $8,000 were delivered to the storeroom and food totaling $8,000 was issued...
Study smarter with the SolutionInn App