proposed relaxation of credit standards of Bulldogs Inc. will increase the balance of accounts receivable by P95,000. The proposed relaxation will also increase the average collection period from 16 days to 3 weeks. How much is the increase in budgeted credit sales of Bulldogs Inc. if the firm increase the average collection period to 3 weeks? Use 360 days. A. 3,025,00 B. 1,750,000 C. 6,840,000 D. 6,300,000
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A proposed relaxation of credit standards of Bulldogs Inc. will increase the balance of accounts receivable by P95,000. The proposed relaxation will also increase the average collection period from 16 days to 3 weeks. How much is the increase in budgeted credit sales of Bulldogs Inc. if the firm increase the average collection period to 3 weeks? Use 360 days.
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- Choose the correct letter and provide solution A firm has total annual sales (all credit) of P100,000.00 and accounts receivable of P20,000.00. How rapidly (in how many days) must accounts receivable be collected if management wants to reduce the accounts receivable to P15,000.00? *a. 22.8 daysb. 34.8 daysc. 44.8 daysd. 52.8 dayse. 54.8 daysA company plans to tighten its credit policy. The new policy will decrease the average number of days in collection from 75 to 50 days and will reduce the ratio of credit sales to total revenue from 70% - 60%. The company estimates that projected sales would be 5% less if the proposed new credit policy is implemented. If projected sales for the coming year are P50 million, calculate the estimated peso change in the firm's account receivable balance caused by this proposed change in credit policy. Assume a 365-day year. [Answer format: INCREASE 1234567]10. Marca Leon is planning to change its credit policy. The proposed change is expected to shorten the collection period from 50 days to 30 days, increase the ratio of cash sales to total sales from 20% to 30%, and decrease total sales by 10%. 10 If projected sales for the coming year is P40,000,000, what is the difference on the average accounts receivable between the current and the proposed change in credit policy? Assume 360 days in a year. a. P2,344,444 b. P2,604,939 c. P4,938,272 d. cannot be determined
- A firm has total annual sales (all credit) of P1,200,000 and accounts receivable of P500,000. How rapidly (in how many days) must accounts receivable be collected if management wants to reduce the accounts receivable to P300,000? choose the letter of the correct answera. 51.3 daysb. 61.3 daysc. 71.3 daysd. 81.3 dayse. 91.3 daysYen Corporation will be relaxing its credit policy. Under the old policy of 2/10, n/25, sales total P5,000,000. Around 40% take the discount while the remainder pay on the 25th day. The proposed policy is 3/10, n/40. The increase in the cash discount and the payment term will like result to a P6,000,000 sales. This is expected to result to average days in receivables of 26.5 days (45% will be settled on the 10h day and the remainder on the 40h day). Variable cost rate will remain at 75%. The weighted average cost of capital is 15%. Using a 360-day year, how much is the annual net benefit/cost of this change? iness 28°CBird's Eye Treehouses, Incorporated, a Kentucky company, has determined that a majority of its customers are located in the Pennsylvania area. It therefore is considering using a lockbox system offered by a bank located in Pittsburgh. The bank has estimated that use of the system will reduce collection time by 1.5 days. Assume 365 days a year. Average number of payments per day Average value of payment Variable lockbox fee (per transaction) Annual interest rate on money market securities 850 $ 800 $.10 a. NPV b. NPV 3.2% a. What is the NPV of the new lockbox system? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. Suppose in addition to the variable charge that there is an annual fixed charge of $3,000 to be paid at the end of each year. What is the NPV now? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
- B. Kings Company presents the following information: 1. Annual credit sales: P 25,200,000 2. Collection period: 3 months 3. Rate of return: 12% Kings company considers changing its credit term from n/30 to 3/10, 1/30. The following are expected to result: (1) 30% of its customers will take advantage of the discount; (2) sales will remain constant; and (3) the collection period is expected to decrease to two months Should the company implement the proposed discount policy? Why?Bird's Eye Treehouses, Incorporated, a Kentucky company, has determined that a majority of its customers are located in the Pennsylvania area. It therefore is considering using a lockbox system offered by a bank located in Pittsburgh. The bank has estimated that use of the system will reduce collection time by 1.5 days. Assume 365 days a year. Average number of payments per day Average value of payment Variable lockbox fee (per transaction) Annual interest rate on money market securities 880 $830 $.10 3.2% a. What is the NPV of the new lockbox system? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. Suppose in addition to the variable charge that there is an annual fixed charge of $3,000 to be paid at the end of each year. What is the NPV now? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely…The Branson Corporation is considering a change in its cash-only policy. The new terms would be net one period. The required return is 2 percent per period. Price per unit Cost per unit Current New Policy Policy $ 86 $ 88 $46 $46 Unit sales per month 4,400 ? What is the break-even quantity for the new credit policy? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely correct. Break-even quantity 4,397.63x
- Lockbox system Eagle Industries feels that a lockbox system can shorten its accounts receivable collection period by 5 days. Credit sales are $3,200,000 per year, billed on a continuous basis. The firm has other equally risky investments with a return of 15%. The cost of the lockbox system is $9,000 per year. (Note: Assume a 365-day year.) a. What amount of cash will be made available for other uses under the lockbox system? b. What net benefit (cost) will the firm realize if it adopts the lockbox system? Should it adopt the proposed lockbox system? a. The amount of cash that will be made available for other uses under the lockbox system is $ (Round to the nearest dollar.)CBA collects its receivables after 25 days on the average, so that they amount to P75,000. A proposal has been made to shorten the credit term to 20 days or by 5 days. Said proposal will reduce receivables (or reduce cash requirement) by P15,000, Assuming 15% cost of money, how much is the expected savings in financing charges?J Ltd. makes credit sales of $424,000 yearly The credit term offered by J Ltd. equals the average collection period ie, net 45 days. The company plans to adopt new credit terms. The new credit terms are 2/18. net 45. It is assumed that all the customers pay on the last day of the discount period. The company plans to use the amount of decrease in accounts receivable to reduce the bank loan that costs 10% Question 16 Assume that the new credit terms would increase the sales to 110% and the company earns 20% on sales before any discounts, determine the amount of net change in income if the company decides to adopt the new credit terms. (Use a 360-day year for calculations. Don't round intermediate calculations. Round the final answer to the nearest whole dollar) $8,400 $2.968 12 13 $2.120 $3.816