Ouestion I Sohar FMCG Company at present offers its customers 60 days' credit. Half the customers, by value, pay on time. The other half takes an average of 80 days to pay. The business is considering offering a cash discount of 1 per cent to its customers for payment within 60 days. The credit controller anticipates that half of the customers who now take an average of 80 days to pay will pay in 60 days. The other half will still take an average of 80 days to pay. The scheme will also reduce bad debts by RO. 200,000 a year. Annual sales revenue of RO 40,000,000 is made evenly throughout the year. At present the business has a large overdraft RO. 8,000,000 with its bank at a cost of 8 per cent a year. You are required to: a. Calculate receivables outstanding under both the old and new schemes. ( 8 Marks) b. How much will the scheme cost the business in discounts? (2 Marks) c. How much is the Net cost of the discount scheme? Should the business go ahead with the scheme? (4 Marks) d. Evaluate the Policy that should be implemented by the organization to improve its receivable management? (6 Marks)