Answered step by step
Verified Expert Solution
Question
1 Approved Answer
5. Grocers Lid sells grocorlos to its customers on credit only. The company's aging reports indicate that clients settle 50% of their bils within the
5. Grocers Lid sells grocorlos to its customers on credit only. The company's aging reports indicate that clients settle 50% of their bils within the same month a purchase is made and the remainder in the next month. If the compary recarded sales of R50 000 in Aprll, how much of these sales will be collected in May? 1. R25000 2. R50 000 3. R75000 4. R100000 5. Ro 6. Situ is considering changing the credit standards at his business. Currenly the standards are very lax, and he feels that bead debts are too high; therefore he wants to tghten his credk standards. Under the current credit standards, Situ expects credit salos of R4 000000 next year, under the proposed standards he expects it to fall sightly to R3 800000 . Variable costs represent 50% of sales. Bad debts under the current plan are expected to be 5% of sales and under the proposed plan it is expected to drop to 3% of sales. Under the current pian Situ's average collection period is 60 days, while he expects it wil drop to 30 days under the proposed plan. Situ can invest spare cash at an interest rate of 10% per annum. Determine the expected influence on the net profit of the company and choose the nearest correct option below. 1. R100000 2. R17282,58 3. R282.58 4. R3 282.58 5. R14 000.00
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started