Business Homework Solutions
#60897
Sales
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Company XYZ is going to relax its credit standards. The propasal will increase sales by 20% from 10million. The average collection period is expected to increase from 35 to 50 days and bad debts are expected to increase from 2% of sales to 7%. The firms variable cost =60% of sales and fixed cost total 2.5 million per year. The oppurtunity cost is 16%. Assume a 365 day year. Determine net profit(cost) of the proposed relaxiation of credit standard.
This helps in determining the net profit(cost) of the proposed relaxation of credit standard
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