Question
AJK Pharma believes that it is possible to increase sales if credit terms relaxed. The profit plan, based on the old credit terms, projected sales
AJK Pharma believes that it is possible to increase sales if credit terms relaxed. The profit plan, based on the old credit terms, projected sales at Rs 2,000,000, a 40% gross profit while fixed cost is Rs 100,000, bad debts of 2% and an account receivable turnover of 10 times. The new policy is expected to increase sales to Rs 2,400,000. However the bad debt will rise to 2% of sales and account receivable turnover will be 6 times The target rate of return is 20%. Is proposal is feasible?
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Auditing and Assurance Services A Systematic Approach
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