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1 . UBS Ltd is considering changing its credit policy. Current sales under the present policy are Tshs 2 , 4 0 0 million per
UBS Ltd is considering changing its credit policy. Current sales under the present policy are Tshs million per annum. The company has made the following estimates:
Present Policy Policy A Policy B
Additional sales demand
Average collection period Month Months Months
Bad debt risk of sales
You are given the following additional information:
The companys expected return on investment is
Variable costs are of gross sales value
There will be no increase in fixed costs from extra turnover
There will be no increase in average stocks or creditors
Required: Advise the company which is the preferable policy.
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