Chit-Chat Limited funds its inventories by taking short-term loan from a bank @ 12% p.a. The estimated
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Chit-Chat Limited funds its inventories by taking short-term loan from a bank @ 12% p.a. The estimated sale of the company for the coming year is ₹ 800 million with a gross margin of 25% on sales. In the past, the inventory turnover ratio was three times. The company is implementing a new inventory management system that would improve the inventory turnover ratio to four times. Compute the saving in interest cost that it would achieve by the new inventory management system.
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