Net profit(cost) of the relaxation of credit standard
Not what you're looking for?
How do you set this problem up? Can you work through the steps and explain what you are doing on each.
Company XYZ is going to relax its credit standards. The proposal will increase sales by 20% from 10 million. The average collection period is expected to increase from 35 to 50 days and bad debts are expected to increase from 2% of sales to 7%. The firms variable cost =60% of sales and fixed cost total 2.5 million per year. The opportunity cost is 16%. Assume a 365 day year. Determine net profit(cost) of the proposed relaxation of credit standard.
Purchase this Solution
Solution Summary
This solution helps in determining the net profit(cost) of the proposed relaxation of credit standard.
Purchase this Solution
Free BrainMass Quizzes
Business Ethics Awareness Strategy
This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.
Learning Lean
This quiz will help you understand the basic concepts of Lean.
Basics of corporate finance
These questions will test you on your knowledge of finance.
MS Word 2010-Tricky Features
These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.
Income Streams
In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.