ABC & Company is making sales of Rs.16,00,000 and it extends a credit of 90 days to it's customers. However, in order to overcome the financial difficulties, it is considering to change the credit policy. The firm has variable cost of 80% and fixed cost of Rs.1,00,000. The cost of capital is 15%. Evaluate different policies and which policy should be adopted?

ABC & Company is making sales of Rs.16,00,000 and it extends a credit of 90 days to it's customers. However, in order to overcome the financial difficulties, it is considering to change the credit policy. The firm has variable cost of 80% and fixed cost of Rs.1,00,000. The cost of capital is 15%. Evaluate different policies and which policy should be adopted?

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter15: Managing Short-term Assets

Section: Chapter Questions

Problem 13PROB

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