XYZ Pharma is a multinational pharmaceutical company selling certain premium tablets in the domestic market for the last three years. The company has not allered any credit on sales and the annual tumover for the year was Rs 10 er Due to increased competition the company is now evaluating new credit policy, which it intends to introduce As per the policy, the company will offer 30 days credit and a discount of 2% if the amount is paid within a day e. 211 net 30). Without this new credit policy, the sales are expected to Increase to Rs 12 crore and with the new policy, the sales wit be Rs 15. It is estimated that 40% of the customers would avail the discount. The contribution margin for its sales * 30% and the company is operating above break-even point. The new credit policy will cause additional costs in terms of collection charges ut 15 and bad debts at 0.5% The interest cost is 10%. Evaluate the credit policy and its implication on profit (20 marie) Explain the role of credit policy and receivables? What are the challenges in accounts receivable and how are they overcome (10 marks) XYZ Pharma is a multinational pharmaceutical company selling certain premium tablets in the domestic market for the last three years. The company has not allered any credit on sales and the annual tumover for the year was Rs 10 er Due to increased competition the company is now evaluating new credit policy, which it intends to introduce As per the policy, the company will offer 30 days credit and a discount of 2% if the amount is paid within a day e. 211 net 30). Without this new credit policy, the sales are expected to Increase to Rs 12 crore and with the new policy, the sales wit be Rs 15. It is estimated that 40% of the customers would avail the discount. The contribution margin for its sales * 30% and the company is operating above break-even point. The new credit policy will cause additional costs in terms of collection charges ut 15 and bad debts at 0.5% The interest cost is 10%. Evaluate the credit policy and its implication on profit (20 marie) Explain the role of credit policy and receivables? What are the challenges in accounts receivable and how are they overcome (10 marks)