Exercise II.

Assess old and new trade credit policy based on the profit and loss account reconciliation method.

Current trade credit policy

Buyers structure

Collection period in days

30%

10

30%

30

25%

60

15%

80

New trade credit policy

40%

15

40%

30

20%

45

Current sales revenues

Forecasted sales revenues

Variable expenses share

Fixed expenses value

SO

1950000

S1

2800000

PIN

PLN

V

68%

F

390000

Discount rate

Current

Forecasted

Money market interest rate

dO d1

r

8%

PLN

7

Number of days'

11%

14

12%