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All the sales of Greedy Ltd are on credit. It is considering a proposal to change its credit policy from allowing debtors credit of 2 months to credit of 3 months.

Sales are currently $600,000 p.a. and as a result of the proposed change, it will increase by 15%.

The contribution/ sales ratio is 20% and the cost of financing working capital using overdraft is 10%.

Currently bad debt is 1% of sales. After the new policy it is expected to be 2% of sales.

Requirements:

Calculate and comment whether the credit policy change is financially viable or not.

Marks: 5

Answers submitted

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Kamrul Hasan's picture
Kamrul Hasan
11/12/2020 - 20:41

10132
5
Kamrul Hasan's picture
Kamrul Hasan
11/01/2020 - 23:04

9984
5
Rakhi Gupta's picture
Rakhi Gupta
10/30/2020 - 21:02

9960
5
Nafeez Imtiaz Hossain's picture
Nafeez Imtiaz H...
09/26/2020 - 21:18

9726
5
Md Hasan Uz Zaman's picture
Md Hasan Uz Zaman
08/24/2020 - 13:10

9510
5
Naima Husne Jahan's picture
Naima Husne Jahan
08/21/2020 - 03:25

9470
5
Naima Husne Jahan's picture
Naima Husne Jahan
08/20/2020 - 20:17

9404
5
Naima Husne Jahan's picture
Naima Husne Jahan
08/15/2020 - 19:08

9402
5
Rakhi Gupta's picture
Rakhi Gupta
08/13/2020 - 22:59

9382
5
Naima Husne Jahan's picture
Naima Husne Jahan
08/12/2020 - 18:33

9354
5
Naima Husne Jahan's picture
Naima Husne Jahan
08/12/2020 - 17:11

9350
5
Naima Husne Jahan's picture
Naima Husne Jahan
08/11/2020 - 02:35

9342
5
Naima Husne Jahan's picture
Naima Husne Jahan
08/07/2020 - 02:52

9326
5
Apurba nandy's picture
Apurba nandy
03/02/2020 - 21:29

8970
5
Apurba nandy's picture
Apurba nandy
03/02/2020 - 21:27

4497
5
MD. Ohidur Rahman's picture
MD. Ohidur Rahman
01/29/2020 - 21:07

8448
5
Md. Shadequl Islam Shamim's picture
Md. Shadequl Is...
01/29/2020 - 21:06

8442
5