Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Surya Industries Ltd. is marketing all its products through a network of dealers. All sales are on credit and the deder are given one month
Surya Industries Ltd. is marketing all its products through a network of dealers. All sales are on credit and the deder are given one month time to settle bills. The company is thinking of changing the credit period with a view to increase its overall profits. The marketing department has prepared the following estimates for different periods oi credit: Present Policy Plan 1 Plan II Plan 1 1.5 2 3 Particulars Credit period (in months) Sales Lakhs) Fixed costs Lakhs) Bad debts (% of sales) 120 130 150 180 818 30 30 35 40 0.5 0.8 1 2 The company has a contribution/sales ratio of 40% further it requires a pre-tax return on investment at 20%. Evaluate each of the above proposals and recommend the best credit period for the company
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started