You have been asked to assess the expected financial impact of each of the following proposals to improve the profitability of credit sales made by your company. Each proposal is independent of the other. Answer all questions. Showing your work may earn you partial credit.
1) Compute the incremental income after taxes that would result from these projections:
2) Compute the incremental Return on Sales if these new credit customers are accepted:
If the receivable turnover ratio is expected to be 3 to 1 and no other asset buildup is needed to serve the new customers…
3) Compute the additional investment in Accounts Receivable
4) Compute the incremental Return on New Investment
5) If your company requires a 20% Rate of Return on Investment for all proposals, do the numbers suggest that trade credit should be extended to these new customers? Explain.
1) If the company currently averages $60,000 in collections per day, how many dollars will this suggested cash management system free up?
2) If all freed up dollars would be used to pay down debt that has an interest rate of 6%, how much money could be saved each year in interest expense? Ctiv<ate vvinclows :To to Settings to activate Windows.
3) Do the numbers suggest that this new system should be implemented if its total annual co
