Question

A firm has credit sales amounting to Rs.32,00,000. The sales price per unit is Rs.40, the variable cost is Rs.25 per unit while the average cost per unit is Rs.32. The average age of accounts receivables of the firm is 72 days. The firm is planning to tighten credit standards. It will result in a fall in the sales volume to Rs. 28,00,000 and the average age of accounts receivables to 45 days. Assume 20% rate of return. Is the proposal under consideration feasible? ​

Answer 1

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