Answered step by step
Verified Expert Solution
Question
...
1 Approved Answer
Zip ( Pty ) Ltd , a company involved in the haberdashery trade, have been experiencing cash flow problems and are looking at ways at
Zip Pty Ltd a company involved in the haberdashery trade, have been experiencing cash flow problems and are looking at ways at managing its cash more efficiently. The payments of creditors have come under scrutiny and they are faced with the following scenario: One of its suppliers Buttons Ltd have offered them a cash saving incentive by allowing then a discount on all invoices paid within days. The usual payment terms are days for the full invoice value. Buttons Ltd has just issued an invoice of R to Zip Pty Ltd The current shortterm deposit interest rate is Round your workings to the nearest rand. Required: As the financial accountant of Zip Pty Ltd you have been asked to advise the company whether to pay the invoice within days or settle the normal credit agreement and pay within days. What other factors would you consider in advising your company to assist with creditor management considering its cash flow problems? What are the risks to your company if credit periods are not kept?
Zip Pty Ltd a company involved in the haberdashery trade, have been experiencing cash flow problems and are looking at ways at managing its cash more efficiently. The payments of creditors have come under scrutiny and they are faced with the following scenario: One of its suppliers Buttons Ltd have offered them a cash saving incentive by allowing then a discount on all invoices paid within days. The usual payment terms are days for the full invoice value. Buttons Ltd has just issued an invoice of R to Zip Pty Ltd The current shortterm deposit interest rate is
Round your workings to the nearest rand.
Required:
As the financial accountant of Zip Pty Ltd you have been asked to advise the company whether to pay the invoice within days or settle the normal credit agreement and pay within days.
What other factors would you consider in advising your company to assist with creditor management considering its cash flow problems?
What are the risks to your company if credit periods are not kept?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started