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Q-4: Hala Fashion LLC is a well-known fashion brand and manufactures quite a large range of products. The company is considering expanding into the GCC

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Q-4: Hala Fashion LLC is a well-known fashion brand and manufactures quite a large range of products. The company is considering expanding into the GCC fashion market. It is estimated that although selling these wide ranges of products in the GCC market will generate additional annual sales of AED27 million, a high 10% of those accounts will be uncollectible. The cost of sales is estimated to be 70% of sales. The company is into 45% tax bracket. a) Calculate Hala's incremental net income. (3 Marks) b) If Hala's receivables turnover ratio is 5, how much will be Hala's incremental accounts receivable investment and after-tax return on that investment? (2 Marks) c) Hala's top management requires a minimum return on investment (ROI) of 25%, should Hala expand into the GCC market? Why or why not? (1 Mark) d) Given this additional sale, Hala estimates that the ordering cost will be AED 16 and the carrying cost will be AED 6 per unit. Calculate economic order quantity (EOQ) for the company. (2 Marks)

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