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Pips Limited is considering offering a cash settlement discount to its customers.

Currently its annual credit sales are $10m and its normal payment terms are 90 days.

Customers will be able to take a 2% discount for payments after 10 days.

Pips anticipates that sales will increase by 10% after the discount offer and approximately 20% of customers will take the discount.

After the offer bad debt will reduce from 2.5% of sales to 1% of sales.

Pips has a CS ratio of 40%.

Currently Pips has an overdraft on which it is paying 10% interest.

Requirements:

Assess whether Pips should offer the discount.

Marks: 6

Answers submitted

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Rakhi Gupta's picture
Rakhi Gupta
11/08/2020 - 11:36

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Kamrul Hasan's picture
Kamrul Hasan
11/01/2020 - 23:29

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Nafeez Imtiaz Hossain's picture
Nafeez Imtiaz H...
09/26/2020 - 21:48

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Md Hasan Uz Zaman
08/23/2020 - 04:42

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Naima Husne Jahan's picture
Naima Husne Jahan
08/19/2020 - 19:57

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Rakhi Gupta
08/13/2020 - 23:10

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Nafeez Imtiaz Hossain's picture
Nafeez Imtiaz H...
06/12/2020 - 22:25

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Apurba nandy's picture
Apurba nandy
03/02/2020 - 21:49

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MD. Ohidur Rahman's picture
MD. Ohidur Rahman
02/02/2020 - 19:33

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Md. Shadequl Islam Shamim's picture
Md. Shadequl Is...
02/02/2020 - 19:32

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Nafeez Imtiaz Hossain's picture
Nafeez Imtiaz H...
02/02/2020 - 19:28

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Tanzeer UL Alaam's picture
Tanzeer UL Alaam
02/02/2020 - 19:32

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Apurba nandy's picture
Apurba nandy
11/28/2019 - 20:44

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Apurba nandy
11/28/2019 - 22:07

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Sohel Miah's picture
Sohel Miah
09/05/2019 - 11:59

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Jahirul Kaosar Rakib
09/04/2019 - 23:27

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Masum Billah's picture
Masum Billah
08/24/2019 - 21:38

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