Corporate Finance
320 Corporate Finance Resolve billing problems quickly. Develop regular schedule to follow up delinquent accounts. Computeriz ...
Cash Management 321 QUESTIONS Prepare a cash forecast. The sales forecasts for Jan, Feb and March are as shown: Jan: Rs 26 cr ...
322 Corporate Finance Chapter 17 17. Receivables Management OBJECTIVES Know the motivations for credit sales and their impac ...
Receivables Management 323 with the population of the state (12 lac approximately). The luxury beach resort hotels have very g ...
324 Corporate Finance Receivables must be financed from current income or new debt or equity. Money doesn’t come free. There a ...
Receivables Management 325 payment is made within the specified period. For instance, 2/10 Net 30 implies that 2 percent disco ...
326 Corporate Finance selling decision. Faith in the customer usually blurs the credit granting decision unless the company ha ...
Receivables Management 327 For the purposes of monitoring, the data available in the aging schedule could be converted into me ...
328 Corporate Finance The aging schedule shows that about 40 percent of receivables are in the less-than-30-days category (in ...
Receivables Management 329 period from 30 days to 45 days, with the objective of increasing sales, involves additional investm ...
330 Corporate Finance Total new investment in receivables = Increase in receivables x Cost of capital = 5.2 × 0.16 = Rs 0.832 ...
Receivables Management 331 C/S ratio = 0.2 Cost of capital = 16 percent New credit policy = 2/10, Net 30 Anticipated increase ...
332 Corporate Finance Buyer’s Perspective Suppose the credit term is 2/10 Net 45. The cost of short-term funds for the company ...
Receivables Management 333 Another company may be relatively generous in extending credit to the marginal customers. Extending ...
334 Corporate Finance [i.e. (0.99 × 0.6 = 0.594) 59.4 percent of all customers] ACP = 20 days Variable costs = 70 percent of s ...
Receivables Management 335 = Rs 2 lac × 360 35 = Rs 19,444 Investment in receivables = Receivables × V/S = 19444 × 0.7 = Rs 13 ...
336 Corporate Finance = Rs 33,000 Incremental bad debt loss = Rs 23,300 Old ACP = 20 days New ACP = 25 days (d) Increase in re ...
Receivables Management 337 Exhibit 17.5 contd. We forecast our receivables using Percent sales 34.8 Receivables balance fracti ...
338 Corporate Finance The company recorded sales of Rs 858.34 cr in 2000 as opposed to Rs 705.66 cr in 1999. SBCH has two fact ...
Receivables Management 339 REFERENCES AND SUGGESTED READING Beckman and R S Foster (1969). Credits and Collections: Management ...
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