Anandam Manufacturing Company Income Statement Year Ended March 31, 2015 (Thousands INR) 2015 2014 Sales Cash Credit Total sales Cost of Goods Sold Gross Profit Operating expenses 800 7,200 8,000 (4,800) 4,320 4,800 (2,832) 1,968 4,800 3,200 Selling, General and Administration Depreciation (1,000) (6601 1,540 (340) 1,200 (360) 450) EBIT 1,118 (158) 960 (288) 672 nterest expenses EBT Tax (30%) Net profit Anandam Manufacturing Company Balance Sheet Year Ended March 31, 2015 (Thousands INR) 2015 2014 Current assets Cash and Cash Equivalents Accounts Receivable Inventories 106 2,100 2,250 4,456 100 1,500 1,500 3,100 Total current assets Non-current assets Property, Plant and Equipment (cost) Less: Accumulated Depreciation Property, Plant and Equipment (net) 5,200 3,660 1,160 2,500 5,600 4,700 9,156 Total Assets Equity and Usblity Equity Share Capital Reserve & Surplus 2,000 1,876 3,876 1,600 1,036 2,636 Total equity Current liability Accounts Payable 2,780 1,728 Non-current liability Long term Borrowings 2,500 5,280 9,156 1,236 2,964 5,600 Total liabilities Total Equity &Liablitiles Ratio AnandamIndustry Anandanm 22% Industry 2296 10% Ratio Return on Equity Return on Assets Gross Profit Ratio Net Profit Ratio Times Interest Earned Inventory Turnover Current Ratio Quick Ratio Receivable Turnover eceivable Days Payable Turnover Payable Days 0.79:1 4.00 X 1.20:1 7.00 X 40% 10.5% 4 X 2.65 X 18.0% 10 X 4.85 X 2.13 X 4.00 X 91 171 days Problem #1 -For the following tasks, please refer to the information provided on the page #2 (ratios. income statement, and balance sheet of the Anandam Manufacturing Company) Part (B) Assume the company introduced a new customer management system and offered a standard price discount of 2/10 n/30. Assume further that all customers would take the new price discount and that the discount leads to an increase of sales by 20%. Credit sales remain at 90% of total sales. What would be Anandam Manufacturing's new average accounts receivable balance? Should the company offer the discount? [15 marks]