Hi Sir, in the above question we calculated average days/ months by simply finding percentage given in question to days/ month but where as normally average will be calculated by calculating the figures and then dividing the sum by 3. can you please explain why we didn’t took the second approach.

Thanks again for another great and helpful lecture.

I was practicing a past question WQZ Q3 (part a ) from Dec 2010 and calculated the settlement discount as per your lecture (using the average receivables).
The answer booklet gave the answer for the receivables 1.5 days different from mine (and when multiplied by the sales came to about $61000 difference in receivables) because they calculated each payment date ie 30 days, 45 days and 60 days separately, multiplying by the percentage of people using that date and then multiplying again by the total sales.
Is that a problem that the answers were so different because they did each date separately?

That should not have made any difference (apart from maybe a rounding difference which is irrelevant).
In future please ask questions like this in the Ask the Tutor forum and not as a comment on a lecture.

Thank you so much for these lectures and notes. I will be re-sitting this paper in September after learning home study from the Kaplan books, which are ok, but i find your lectures are so good to add to my knowledge and hopefully push me over the 50%. I was only 6 marks off x

Could you please give the answers to example 4 and 5?
For example 4 I got 44.59%
=(1+(2/98))^(365/20)
and for 5. They should take advantage of the early discount.
=(1+(1.5/98.5))^(365/25)
24.9% > 13%

Sir, in these questions we assume that the the whole business is done on the cash from overdraft facility, but what if the overdraft is just a small amount (lower than the reduction in the receivables)?

Do we then include in the cost, the interest on overdraft actually taken?

There will always be an interest cost – either they are using an overdraft and are paying interest, or they have a cash balance and would be losing interest they could have been earning. The question will make it clear what the relevant interest rate is.

Hello Sir,
Thank you very much for your clear well explained lectures. I have a little different approach to example 2 and 3 event though I understand your method. Can please tell if it acceptable:

Example 2:
Current Cost Without Discount Interest Paid/Cost
30 Day 20m*20%*15%*(30/365) 49315
60Day 20m*50%*15%*(60/365) 246575
90Day 20m*30%*15%*(90/365) 221918
Total Cost 517808

With Discount Policy Interest Paid/Cost
1% Discount 20m*60%*1% 120000
Remaining 20m*40%*15%*(90/365) 295890
Total Cost 415890

Net Saving from Offering Discount is 517808-415890=$101918
Decision: Offer discount because it cost less.

Example 3
Current Cost
1 Month 10m*20%*18%*(1/12) 30000
2 Month 10m*30%*18%*(2/12) 90000
3 Month 10m*50%*18%*(3/12) 225000
Total Cost 345000

Factoring Receivable (Cost)
1 Month 10m*100%*18%*(1/12) 150000
Fee 10m*2% 200000
Net Saving From Credit Control (20000)
Total Cost 330000

Net Saving on Factoring 345000-330000=$15000
Decision: Factor Receivable since there is net saving or the cost of not factoring outweighs the cost of factoring

I can see the decision in example 2 is different from the lecture. But Example 3 seems similar. Am I wrong in my thinking and why please?

Your prompt response will be much appreciated. Thank you in advance.

Your calculation of the cost with the discount in example 2 is wrong because you have not included the interest cost on the 60% who do take the discount, for the 30 days that they are still taking.

Hello. I have a question which is much more on arithmetic. I do understand in your lecture that we did not need to convert month into days for example 3. Right. The thing here is that when for example we convert the month into days, the answer not the same 69/365*10,000,000.. Is there any particular reason for that? because i have based the % on 1month (30days), month 2 (60 days) and month 3 (90).Thank you

I have a question about process. I found myself first working problems slightly different than the way explained, with similar results, and would like to know if it is correct (acceptable) or not.

IE: J11Q4 – Part B:
I calculated interest cost as 120,000 x 7.50 = 900,000 x 4.5% = 40,500 x 2/12 = 6,750.

Where the given answer calculates the cost of interest at 90 and 30, and took the difference for 6,657.

great lecture Prof.
in example 3 .However i dont understand one point. Why have u written “interest saved on reduced receivables”
in my understanding- if we don’t consider the factor, then we pay the interest. But if we do consider the factor, he covers 100% of our debt. There is nothing given about the interest charged by the factor. Is it assumed that the interest rate 18% is also charged by the factor?

Nice lecture… However I came across one issue. Where in Example 3 for the average receivable when using the factor i inputted 2.3/12 as a fraction * $10M which gave me an incorrect answer. I realized I must divide out that fraction to get the answer you got.

In example 2, to calculate the average receivables after discount, why didn’t we take into account the discount as well? I mean, instead of $20m*54/365, why is it not $20m*99%*54/365?

In example 1, for calculating the discount (1% X 60% X 20M) = 120K, why did you then not use the 15% overdraft? I am confused as to why the 15% overdraft is only used when calculating benefits and not costs.

Sir,
Can you please explain in example 5, when rate of effective cost is greater than rate of interest on overdraft, why is it beneficial to the company?

Delaying payment would save us overdraft interest, but would lose us the discount.
Losing the discount costs more than the saved interest therefore it is better to pay early.

Or, the other way of looking at it is that paying early gains us the discount, but means paying more overdraft interest. Again, it is better to pay early if we save more than we lose.

Dear John,
I don’t understand the workings provided in the back of the notes to examples 1 and 4. It’s different to how you taught in the lecture. I get the arithmetic but could you please clarify in your earliest convenience as am sitting September session. Still got a lot to do.
Kind regards
Shahz 🙂
p.s your lectures are great as always

yes, I watched the first lecture and I understand how you arrived at it. I checked the answer in the back, it is presented different. I understand the arithmetic but I want to know which way is acceptable in the Exam? Thanks
p.s i downloaded the notes once more to double check

I don’t understand. Both the lecture and the answer at the end of the lecture notes end up with an effective annual cost of 27.75%.

The workings are effectively the same (although how you do your workings is not relevant – simple discounts will only be asked as an MCQ and there nobody looks at your workings)

Hi sir John
Just a slight correction. In eg 2 where u made the recommendation to offer the discount, you really should’ve said used the factor because the question ask about factoring of receivables

When looking at factoring, how would you handle bad debts that existed before the factoring? In addition if the factor is only offering 80% on invoice rates at an interest rate?

Irrecoverable debts existing before using factoring would be ignored. We are looking to see if factoring would be worthwhile as a long term policy for the future. Existing bad debts would be the same whether or not we decided to factor.

The situation where the factor charges interest on advances is dealt with in the revision lectures – I go through an example that it in the free revision notes.

There are no videos for those two examples because the technique is identical to that of simple discounts to receivables.
You can test yourself on them (and, of course, the answers are at the back of the Lecture Notes).

Thank you so much sir !!!.for such a quick reply 🙂
one more thing that I want to know..the questions given in Kaplan’s complete text book are sufficient for practice .?

You cannot force the customers to take a discount. However, you will offer one if it costs less that the interest we would otherwise paying – and then we would hope that everyone would take advantage of it 🙂

Thank you for your grateful lectures.
I have one question.
In the example 2, when interest saved on lower receivables is calculated, new level of receivables is calculated as 20 million * 54 days/365 days.
1% of discount was offered. 60% of customers are taking the discount. So new level of receivables is 20,000,000 – 120,000 after discount.
Why is new level of receivables calculated as above, and not as follows?
(20,000,000 – 120,000discount) *54days/365 days?.

Certainly you can subtract the discount. In some answers the examiner has subtracted the discount and in other answers he has not – he gives full marks for either.

Sir, why do we not minus the $20k of credit control staff? and do we not need to include overdraft under cost of new policy but under benefits instead?

I mean “why do we not minus the $20k of credit control staff? and why do we not need to include overdraft under cost of new policy but under benefits instead?

The fact the we need fewer credit control staff means that we will save 20,000 if we use the factor. The saving of 20,000 is therefore listed as a benefit of using the factor.

Using the factor will mean that average receivables are reduced throughout the year (because we are collecting money faster). Therefore the overdraft will be reduced, and therefore there will be less interest payable. It is the interest saved that is listed as a benefit.

the management of recievables and payables when I tried some of previous paper exams it will become complicated how can I ease them and the lecturer said first list the costs and then the savings but that didn’t work at all exercises can you show other ways to solve them ease my understanding of this management of receivable and payables

Although you can set out your workings in different ways, the approach is always the same – we need to calculate the costs and the savings resulting from the new policy and make the decision on that basis.

Every question is worded differently and when there is a problem it is in interpreting the question.

If you have problems with any specific past exam question then do ask in the F9 Ask the Tutor forum and I will try and help.

I have just done example 5 on this chapter and checked my answer. Now then, I got the correct answer as I used the first method. However, I notice that there is an alternative method and the answer is different i.e. the first method recommends you do not take advantage of the discount whereas the second method says that you should take advantage. Why do the answers differ? Is there a right and a wrong way? Which way should be used for the exam or should we do both to gain full marks??

Both methods come to the same conclusion – i.e. they should take the discount.
(Maybe you got the correct number (22%) using the first method but made the wrong decision. Here taking the discount and paying early will cost 13% (paying earlier means bigger overdraft) whereas not taking the discount and paying later will ‘lose’ us 22%. So better to take the discount)

Either way would get full marks in the exam, but the first way is more sensible because it is quicker. (Although to be asked for any calculations regarding payables management is actually rather unlikely.)

Yes – you would get full marks.
What you have written is actually more correct, but the examiner allows the other way (even though strictly it is not as correct). 🙂

I would like to express my sincerest gratitude for your lectures – i have attended BPP courses and they do not compare to your lectures. All my passes in the exams are due to open tuition courses….i am now sitting F9 in june.

Dear John,
In example 2…why you didn’t take the sales figure to work on rather we supposed $100 invoice. Why???
I have learnt the logic though and also tried other amount assumption like $2000 etc…but that was my question???

At the start it seemed to be too much confusing but ultimately with your clear directions, the ex3 and 4 are cleared like crystal.

You could use any number – I use 100 because it makes the number easy 🙂

There is no point though in using the sales figure. Just because we might offer a discount we cannot force customers to take it. If it good for us then we will offer it and hope they take it, but we cannot force them to.

I don’t think you listened carefully enough to the lecture, because I do explain 🙂

The reason is that in those examples we know what proportion of our customers will take the discount.
Also, because there are other costs and benefits involved, we need to calculate the costs and benefits over a year.

Hi Mr Moffat, forgive me asking question out if this lecture,, in december 2008 qstn no 2,, regarding factoring, when calculating the interest for the advanced payment of the face value of receivable,, the model answer was { 80%× revised recivable× (annual interest – overdraft interest rate) } ,, I was wondering why exactly they subtracted the the interest charged minus the overdraft,, they shoud rather just take the interest payment. I would really appreciate for your timely response.

There is more than one way of showing the workings. If you do it the same way as in my lecture then you will end up with exactly the same net saving or net cost.

Can I ask a bit off-top question although it’s still quite much about working capital, how UNFUNDED DAYS be calculated? Is that come from A/R days + Inventory Days-Payable days?

In these examples you found the average receivables as Months x %age (e.g in 2nd example it was 1 x 20% ; 2 x 30% ; 3 x 50% so you got 2.3 months answer as average which you multiply by 10m and divide by 12) to come at 1916667$

I used a slightly different approach as i found the averrage receivables as

[ (1/12 x 20%) + (2/12 x 30%) + (3/12 x 50%) ] x 10mil

BUT my answer is different than yours (21666667) is my approach incorrect or this is also fine? will i get marks using the method mentioned??

regarding FACTORING , in comparison of COSTS and SAVINGS , under savings we calculate reduction in receivables (current receivables – receivables under factor) and then we multiply it with the overdraft interest cost right? like we did it ANJO and in GORWA ,current minus recivables under factor. for current we pick receivables from balance sheet , and for facotrs receivables, we normally calculate it by factors days . but in kaplan in question and aswers at the end , there is a question named MARTON, there he just didn’t make any comparison of current and new receivables, he just calculated sales * factor days /365 . and multiply it by interest cost . how ever the CURRENT RECEIVABLES are given in balance sheet …. and the receivables scenario was just same as ANJO and GORWA. well i m confuzed which one is correct ? if i do it in exam straight away receivables under factor and multiply it with o/d cost will he cut my marks ? Thank you …… kindly help me by telling , which approach should be adopted ? i m pretty much wanting to adopt the approach like in ANJO and GORWA . ?

I am away from home until Thursday and I do not have Kaplan books with me. I will give you a proper reply when I get home on Thursday.
However, in general you get the marks whichever approach you take (but I will need the check the question on Thursday to check that there is nothing special in the question that you might have missed).

hey there, as in example 2 of this video lecture, there is (if its the correct word) a class of receivables who pays like 20% in 30 days, 50% in 60 days and 30% in 90 days, so u multiply the days with percentage and then collectively get number of days , and accumulatedly put in the formula of average receivables , SALES *days/365 i.e 20m *63days/365days. right ? and then make a comparison with new n old receivables , and then multiply it by an od interest rate ? right? .. i m pretty much clear with it . but i have put the same approach in december 2012 question .2 part a KXP Company. current receivables are given 2466m . for revised receivables days i did 30days *0.5 plus 45days * 0.3 plus 60days * 0.2 which gives 41days . then to calculate avg revised receivables i did 15m sales multiplied by 41days/365days. which gives me $1684932 receivables. but in the solution he seperatedly multiplied sales by evey revised days which gives an answer of $1664384 receivables. my question is what is this difference for? what is the correct approach ? as i have just followed the solution of ur example 2 of this video lecture. where am i lacking ? kindly rectify my confusion . another question that the formula of annual cost of discount according to kaplan [ 1 + discount/ amount left to pay] ^ no of periods – 1 is applicable when and where ? why we can not apply that formula in this question? and where isit there to be applied? THANK YOU …..

The approach you took comes to 40.5 days, not 41 days! If you use the correct 40.5 days you will get the same answer as the examiner.

The reason that you cannot use the other approach is because this only works if there is a fixed payment period – not where some pay in 30 days, some pay in 45 days and some pay in 60 days.

Thank you ,,,,,,,,,,, , was just mistaking again in rounding off ………. !! I m clear now :). and the fixed payment period (the formula) is called the Annual cost of a discount ?. and the approach where some pay in 30 days , some in 50 days and some in 60days is called the Early settlement discount, right ? and Early Settlement Discount always requires for calculating the net cost or benefit ? right ?

Sir, where are the videos for Example 4 and 5. They are missing. Please work on that too… I’ve understood receivables but due to lack of lectures of payables, i.e example 4 and 5 I no nothing about Payables. Please check it and work on it. Please!

Sir, there is always a difference between the answers of the two approaches i.e the one you set out and the formula given in KAPLAN [ 1 + discount/ amount left to pay] ^ no of periods – 1…….the cost is almost 1% different every time and it can have an impact on the overall decision….

Yes – there is always a difference, and the formula you quote is more accurate.
However it has only been relevant in the exam two times ever (usually it is the more complicated discount problem which needs a different approach) and both times the examiner said he would accept the approximate method. (And both times it was only a couple of marks and did not affect the decision)

For example 5 in the course notes i applied the discount when calculating the new payables figure but i noticed that you did not until the end why is this? and would i be marked down in the exam for this difference. i worked it like this:

current payables: 40/365 x 100 000= 10959
New payables : 15/365 x 98.5% x 100000 = 4048
Fall in payables : 6911
Interest on new payables: 6911 x 13% = 898
value of discount 1500-898=602
Take discount due to a savings of $602 for paying early.

why does these videos get stuck in the middle,like if the video takes 30 minutes it stops at 18min and some don’t play at all .am i the only one facing this problem please help me before its too late.thanks.

why does these videos get stuck in the middle,like if the video takes 30 minutes it stops at 18min .am i the only one facing this problem please help me before its too late.thanks

I am struggling to understand example 4
“A supplier offers a 2% discount if invoices are paid within 10 days of receipt. Currently we take 30 days to pay invoices and therefore do not receive the discount. Calculate the annual % effective cost of refusing the discount.

The solution at the end of the lecture notes given is as follow
Effective cost = 2/98 x 100% over 20 days (30-10) = 2/98 x 365/20 x 100p.a. = 37%p.a.

Hello sir there is this question in kaplan text on managing receivables. the way it is solved in the ext is not clear to me:
here is the question
Paisley Co has sales of 20m for the previous year and receivables at the year end of 4 million and the cost of financing receivables is covered by an overdraft at the interest rate of 12 percent per anum. it is now considering offering a cash discount of 2 percent for payments of debts within 10 days. should it be introduced if 40 percent of customers will take up the discount
here is how i solved it
receivables days = 4000000/2000000 x 365 = 73 days
if 40 percent take discount
receivables = 0.4 x10/365 x 20000000 + 0.6 x 73/365 x 20000000
= 219178 + 2400000
= 2619178
Interest on receivables = 0.12 x 2619178 = 314301
Discount allowed = 0.02 x 0.4 x 20000000 = 160000
The solution in the text says it is cheaper not to offer the discount and finance the receivables using overdraft but my answer is showing that the interest on over draft is greater than the discount allowed

We assume that our receivables throughout the year is 4,000,000
So 4,000,000/20,000,000=73 days is our current receivables

New receivables
40% of the customers will take the discount and will pay us within 10 days – 10×40%=4days
60% of the customers will pay as usual at the end of 73 days – 73×60%=43.8 days
Total new recievables is 47.8 days

20,000,000 x 47.8/365 = 2,619,178 this is our new average receivables after new discount system is introduced
4,000,000 – 2,619,178 = 1,380,822 fall in av. receivables
1,380,822 x 12% = 165,699 savings p.a. after new discount introduced

P.S. scroll down the page there are few comments about the same example 😉

Hi, I would like to know what do we make of the 37% derived from example 4? Is the question incomplete, or do I have to make an assumption?

If my understanding is not wrong, 37% is cost that will face by suppliers to get the cash now (for working capital) by giving out discounts as oppose to borrowing from the bank and having to pay the bank’s interest rate. From a payable/client’s point of view, I will accept this discount if a banks % for overdraft is <37% so that I can borrow and pay off while benefiting from the discount of 2%…..

I have computed the savings as follows: actually we have managed to reduce our receivables only for 40% of the receipts (20% were already paying within 30 days); this means that we will obtain 40% of the sales of 20 mio 30 days earlier than normal, hence savings would be: 40% x 20 mio x 15% x 30/365 = 98k (difference to the result in the book is round 20k). Could you please advise as to where I am wrong? Thanks!

Very nice ….. i have learn a lot from this lecture …
Can there be a question whether to factor or to offer discount , as far as i have done only question deciding whether to offer or not the discount or whether to factor or not …? Thank you

Dear sir, u dnt talk about payables and i found questions about it and also there is something called APR it is a formula and i have different examples and after listening to the lect still i cant solve it so please reply what i can do.
Thanks.

There is a formula in my book
It is percentage of cost of the discount = 1-[100/100-2] x 365/20
Is it just another method of finding out if settlement discount should be taken? or is it something else ?

@amal123, It is the same as what I have done in my lecture!
(Although obviously it is based on days and not months, and it is only correct if the discount is for paying 20 days earlier than otherwise)

dear sir,
after listening to the tuition i tried answering the following question but im not getting the correct answer. can you please help me out.
paisley co has sales of $20 million for the previous year, receivables at the end of $4 million and the cost of financing receivables is covered by an overdraft at the interest rate of 12% p.a. it is now considering a cash discount of 2% for payment of debts within 10 days. should it be introduced if 40% of customers will take up the discount??
my answer was cost of discount $160 000 and savings p.a $261699
4m/20m x 365= 73 days
73 days x 60%= 43.8 days
20m x 43.8/365= $2.4 m
new receivables
10 x 40%= 4
4/365 x 20m= $219178

2400000-219178=2180822
2180822x 12%= 261699

cost of discount 20m x 2% x 40%= $160 000
savings p.a= $261699

the answer in the book is savings of $165699
can you please tell me where is my mistake.
thanks in advance

Calculation of the new receivables after ofering the discount in example 2 should use 99 % of the $20m (as opposed to $20m) multiplied by 54/365 as that is the new sale p.a.. Any thoughts? Thank you

If I understood it correctly you are trying to ascertain whether its worth giving the discount and you have to consider the full receivables, I believe the only time you use a percentage is if the question had said receivables is 20m and we have already collected 1m. Commentst anyone.

this is the only time i have really enjoyed my F9 through the lectures by John Moffat because i understand the concept behind and its now easier for me to tackle most questions
Thank you May God bless you

Syed says

Hi Sir, in the above question we calculated average days/ months by simply finding percentage given in question to days/ month but where as normally average will be calculated by calculating the figures and then dividing the sum by 3. can you please explain why we didn’t took the second approach.

John Moffat says

Dividing what figures by 3? That would make so sense at all 🙂

The average receivables depend on the average collection period!

shantell says

You have made my life a bit easier now, hats off!!!!

John Moffat says

Great 🙂

Shimon says

Hi,

Thanks again for another great and helpful lecture.

I was practicing a past question WQZ Q3 (part a ) from Dec 2010 and calculated the settlement discount as per your lecture (using the average receivables).

The answer booklet gave the answer for the receivables 1.5 days different from mine (and when multiplied by the sales came to about $61000 difference in receivables) because they calculated each payment date ie 30 days, 45 days and 60 days separately, multiplying by the percentage of people using that date and then multiplying again by the total sales.

Is that a problem that the answers were so different because they did each date separately?

Thanks.

John Moffat says

That should not have made any difference (apart from maybe a rounding difference which is irrelevant).

In future please ask questions like this in the Ask the Tutor forum and not as a comment on a lecture.

URVASHI says

Dear John,

Do you have a specific lecture on the payables part as well? Is it an important part of the curriculum ?

Thanks in advance

URVASHI says

Oh, I just learnt from the other comments, that there is no separate lecture on the payables, since it is the same logic. Thanks anyway.

John Moffat says

No problem 🙂

Adele says

Thank you so much for these lectures and notes. I will be re-sitting this paper in September after learning home study from the Kaplan books, which are ok, but i find your lectures are so good to add to my knowledge and hopefully push me over the 50%. I was only 6 marks off x

Thanks x

John Moffat says

Thank you for the comment, and all the best for your resit.

Dragana says

Hello,is there any lecture od payables(example 4)?

John Moffat says

No – it is not needed, because the logic is exactly the same as for simple discounts for receivables.

Eoin says

Could you please give the answers to example 4 and 5?

For example 4 I got 44.59%

=(1+(2/98))^(365/20)

and for 5. They should take advantage of the early discount.

=(1+(1.5/98.5))^(365/25)

24.9% > 13%

John Moffat says

The answers to all examples are at the end of the lecture notes – look at the contents page.

annian says

thank you so much for the amazing lecture, you are such a bless for all acca students 🙂

John Moffat says

Thank you very much for the comment.

Kinji says

Sir, in these questions we assume that the the whole business is done on the cash from overdraft facility, but what if the overdraft is just a small amount (lower than the reduction in the receivables)?

Do we then include in the cost, the interest on overdraft actually taken?

John Moffat says

There will always be an interest cost – either they are using an overdraft and are paying interest, or they have a cash balance and would be losing interest they could have been earning. The question will make it clear what the relevant interest rate is.

Ernest says

Hello Sir,

Thank you very much for your clear well explained lectures. I have a little different approach to example 2 and 3 event though I understand your method. Can please tell if it acceptable:

Example 2:

Current Cost Without Discount Interest Paid/Cost

30 Day 20m*20%*15%*(30/365) 49315

60Day 20m*50%*15%*(60/365) 246575

90Day 20m*30%*15%*(90/365) 221918

Total Cost 517808

With Discount Policy Interest Paid/Cost

1% Discount 20m*60%*1% 120000

Remaining 20m*40%*15%*(90/365) 295890

Total Cost 415890

Net Saving from Offering Discount is 517808-415890=$101918

Decision: Offer discount because it cost less.

Example 3

Current Cost

1 Month 10m*20%*18%*(1/12) 30000

2 Month 10m*30%*18%*(2/12) 90000

3 Month 10m*50%*18%*(3/12) 225000

Total Cost 345000

Factoring Receivable (Cost)

1 Month 10m*100%*18%*(1/12) 150000

Fee 10m*2% 200000

Net Saving From Credit Control (20000)

Total Cost 330000

Net Saving on Factoring 345000-330000=$15000

Decision: Factor Receivable since there is net saving or the cost of not factoring outweighs the cost of factoring

I can see the decision in example 2 is different from the lecture. But Example 3 seems similar. Am I wrong in my thinking and why please?

Your prompt response will be much appreciated. Thank you in advance.

John Moffat says

Your calculation of the cost with the discount in example 2 is wrong because you have not included the interest cost on the 60% who do take the discount, for the 30 days that they are still taking.

Ernest says

Thank you very much for your reply. Please apart from that error (which I now realised with your help) will the format and approach be ok?

kirsley says

Hello. I have a question which is much more on arithmetic. I do understand in your lecture that we did not need to convert month into days for example 3. Right. The thing here is that when for example we convert the month into days, the answer not the same 69/365*10,000,000.. Is there any particular reason for that? because i have based the % on 1month (30days), month 2 (60 days) and month 3 (90).Thank you

John Moffat says

It is because not all months last 30 days – some last 31 and one lasts only 28 (or 29).

The difference is minor, but in the exam use days if the question is in days and use months if the question is in months.

Edward says

I have a question about process. I found myself first working problems slightly different than the way explained, with similar results, and would like to know if it is correct (acceptable) or not.

IE: J11Q4 – Part B:

I calculated interest cost as 120,000 x 7.50 = 900,000 x 4.5% = 40,500 x 2/12 = 6,750.

Where the given answer calculates the cost of interest at 90 and 30, and took the difference for 6,657.

Comment?

John Moffat says

You must ask this sort of question in the Ask the Tutor Forum and not as a comment on a lecture.

Warhorse says

great lecture Prof.

in example 3 .However i dont understand one point. Why have u written “interest saved on reduced receivables”

in my understanding- if we don’t consider the factor, then we pay the interest. But if we do consider the factor, he covers 100% of our debt. There is nothing given about the interest charged by the factor. Is it assumed that the interest rate 18% is also charged by the factor?

Slightly confused. PL Help 🙂

Thanks in advance

Damian says

Nice lecture… However I came across one issue. Where in Example 3 for the average receivable when using the factor i inputted 2.3/12 as a fraction * $10M which gave me an incorrect answer. I realized I must divide out that fraction to get the answer you got.

shaafia says

In example 2, to calculate the average receivables after discount, why didn’t we take into account the discount as well? I mean, instead of $20m*54/365, why is it not $20m*99%*54/365?

shaafia says

I’m sorry I meant to say why is it not ($20m-$120k)*54/365?

John Moffat says

You can (and I do say this in the lecture).

Sometimes the examiner ignores the discount in his answers, and sometimes he subtracts it – there are arguments both ways.

However he has always said that he accepts either for full marks (and the difference is always small in the exam).

shaafia says

thank you

John Moffat says

You are welcome 🙂

$@M says

Hi Sir,

Thank you for the great videos.

I have a doubt for Ex.4, the ans behind is 44.58%, but as per your calculation for ex.1,

I get 14.45%.

Kindly clarify.

Thanks.

John Moffat says

I don’t know how you got your answer.

The interest is 2/98 (0.020408) over 20 days.

The yearly interest rate = (1.020408)^(365/20) ) -1 = 0.4458 or 44.58%

$@M says

Thank you sir, it was my arithmetical mistake.

Lilit says

Once again thank you !!!!!!!!! You make complicated stuff so easy to understand !!!

John Moffat says

Thanks for the comment – I am pleased it is helping you 🙂

ahlaamzk says

Hi Mr. Moffat,

In example 1, for calculating the discount (1% X 60% X 20M) = 120K, why did you then not use the 15% overdraft? I am confused as to why the 15% overdraft is only used when calculating benefits and not costs.

Thanks

ahlaamzk says

Sorry I mean example 2

ahlaamzk says

I figured it out 🙂

priyanka says

Sir,

Can you please explain in example 5, when rate of effective cost is greater than rate of interest on overdraft, why is it beneficial to the company?

John Moffat says

Delaying payment would save us overdraft interest, but would lose us the discount.

Losing the discount costs more than the saved interest therefore it is better to pay early.

Or, the other way of looking at it is that paying early gains us the discount, but means paying more overdraft interest. Again, it is better to pay early if we save more than we lose.

priyanka says

Thank you, I understood it.

shahz20 says

Dear John,

I don’t understand the workings provided in the back of the notes to examples 1 and 4. It’s different to how you taught in the lecture. I get the arithmetic but could you please clarify in your earliest convenience as am sitting September session. Still got a lot to do.

Kind regards

Shahz 🙂

p.s your lectures are great as always

John Moffat says

Have you watched the first lecture on the management of receivables (this is the second one).

In that lecture I go through example 1 (which is ‘simple’ discounts)and the answer is the same as in the current edition of the free lecture notes.

shahz20 says

yes, I watched the first lecture and I understand how you arrived at it. I checked the answer in the back, it is presented different. I understand the arithmetic but I want to know which way is acceptable in the Exam? Thanks

p.s i downloaded the notes once more to double check

John Moffat says

I don’t understand. Both the lecture and the answer at the end of the lecture notes end up with an effective annual cost of 27.75%.

The workings are effectively the same (although how you do your workings is not relevant – simple discounts will only be asked as an MCQ and there nobody looks at your workings)

Adrian says

Hi sir John

Just a slight correction. In eg 2 where u made the recommendation to offer the discount, you really should’ve said used the factor because the question ask about factoring of receivables

John Moffat says

But example 2 is about discounts, it is example 3 that is about factoring.

Noreen says

When looking at factoring, how would you handle bad debts that existed before the factoring? In addition if the factor is only offering 80% on invoice rates at an interest rate?

John Moffat says

Irrecoverable debts existing before using factoring would be ignored. We are looking to see if factoring would be worthwhile as a long term policy for the future. Existing bad debts would be the same whether or not we decided to factor.

The situation where the factor charges interest on advances is dealt with in the revision lectures – I go through an example that it in the free revision notes.

Raghav says

Hello Sir,

Where are video lectures of Example 4 & 5 (Working Capital Management- Payables Part)?

John Moffat says

There are no videos for those two examples because the technique is identical to that of simple discounts to receivables.

You can test yourself on them (and, of course, the answers are at the back of the Lecture Notes).

Raghav says

Thank you so much sir !!!.for such a quick reply 🙂

one more thing that I want to know..the questions given in Kaplan’s complete text book are sufficient for practice .?

John Moffat says

You should really get an Exam Kit because they contain lots of exam standard questions (including past real exam questions), and practice is vital.

DreamerSK says

Hello,

What if 60% of the customers only account for 1% of sales. In practice, would this be accounted for?

John Moffat says

It doesn’t make any difference.

You cannot force the customers to take a discount. However, you will offer one if it costs less that the interest we would otherwise paying – and then we would hope that everyone would take advantage of it 🙂

DreamerSK says

I’m still unclear as the calculations are based on the percentage of customers and not the dollar amount they represent.

DreamerSK says

Hello,

What if 60% of the customers only account for 1% of sales. In practice, would this be accounted for?

Thanks in advance.

Irma says

Dear Sir Moffat,

Thank you for your grateful lectures.

I have one question.

In the example 2, when interest saved on lower receivables is calculated, new level of receivables is calculated as 20 million * 54 days/365 days.

1% of discount was offered. 60% of customers are taking the discount. So new level of receivables is 20,000,000 – 120,000 after discount.

Why is new level of receivables calculated as above, and not as follows?

(20,000,000 – 120,000discount) *54days/365 days?.

Best regards

John Moffat says

Certainly you can subtract the discount. In some answers the examiner has subtracted the discount and in other answers he has not – he gives full marks for either.

Irma says

Thank you Mr Moffat

Best regards

Erica says

Sir, why do we not minus the $20k of credit control staff? and do we not need to include overdraft under cost of new policy but under benefits instead?

Erica says

I mean “why do we not minus the $20k of credit control staff? and why do we not need to include overdraft under cost of new policy but under benefits instead?

John Moffat says

The fact the we need fewer credit control staff means that we will save 20,000 if we use the factor. The saving of 20,000 is therefore listed as a benefit of using the factor.

Using the factor will mean that average receivables are reduced throughout the year (because we are collecting money faster). Therefore the overdraft will be reduced, and therefore there will be less interest payable. It is the interest saved that is listed as a benefit.

bona007 says

Is the net cost $46,027 ($120000-$73973) in question 2?

John Moffat says

Yes it is. (There are answers to all of the examples at the back of the course notes – it is listed on the contents page.)

Abdullahi says

the management of recievables and payables when I tried some of previous paper exams it will become complicated how can I ease them and the lecturer said first list the costs and then the savings but that didn’t work at all exercises can you show other ways to solve them ease my understanding of this management of receivable and payables

John Moffat says

Although you can set out your workings in different ways, the approach is always the same – we need to calculate the costs and the savings resulting from the new policy and make the decision on that basis.

Every question is worded differently and when there is a problem it is in interpreting the question.

If you have problems with any specific past exam question then do ask in the F9 Ask the Tutor forum and I will try and help.

Abdullahi says

Working Capital part at the side of recievables and payables when I tried some of previous Paper it will become complicated how can I ease them

Abdullahi says

I want to print out the F9 lecture notes, how can

John Moffat says

If you download them first, you should be able to print them out as normal.

Queenie says

Hello John

Just a quick question…

I have just done example 5 on this chapter and checked my answer. Now then, I got the correct answer as I used the first method. However, I notice that there is an alternative method and the answer is different i.e. the first method recommends you do not take advantage of the discount whereas the second method says that you should take advantage. Why do the answers differ? Is there a right and a wrong way? Which way should be used for the exam or should we do both to gain full marks??

Your input would be much appreciated.

Thank you

Charlotte

John Moffat says

I think that you have misread the answer!!

Both methods come to the same conclusion – i.e. they should take the discount.

(Maybe you got the correct number (22%) using the first method but made the wrong decision. Here taking the discount and paying early will cost 13% (paying earlier means bigger overdraft) whereas not taking the discount and paying later will ‘lose’ us 22%. So better to take the discount)

Either way would get full marks in the exam, but the first way is more sensible because it is quicker. (Although to be asked for any calculations regarding payables management is actually rather unlikely.)

eijamalcolm92 says

Hello Sir,i have a question regarding example 4. By using annual effective cost calculation, the answer will be 44.6% —> 100/98 ^ (365/(30-10) – 1

And in the answer section shows a different calculation with a different answer.

If I use annual effective cost calculation, can I still gain marks? Thanks!

John Moffat says

Yes – you would get full marks.

What you have written is actually more correct, but the examiner allows the other way (even though strictly it is not as correct). 🙂

eijamalcolm92 says

Okay, got it! Thanks 😀

absylum007 says

what about payables ?? we do them ourself ??

John Moffat says

Yes 🙂

It’s exactly the same logic as simple discounts for receivables (and, of course, the answer is at the back of the Course Notes)

mujondo says

Dear Mr Moffat,

I would like to express my sincerest gratitude for your lectures – i have attended BPP courses and they do not compare to your lectures. All my passes in the exams are due to open tuition courses….i am now sitting F9 in june.

Thank you so much for all your help!

Muji

John Moffat says

Thanks a lot for the comments 🙂

acca2050 says

Dear John,

In example 2…why you didn’t take the sales figure to work on rather we supposed $100 invoice. Why???

I have learnt the logic though and also tried other amount assumption like $2000 etc…but that was my question???

At the start it seemed to be too much confusing but ultimately with your clear directions, the ex3 and 4 are cleared like crystal.

Many Thanks

John Moffat says

You could use any number – I use 100 because it makes the number easy 🙂

There is no point though in using the sales figure. Just because we might offer a discount we cannot force customers to take it. If it good for us then we will offer it and hope they take it, but we cannot force them to.

acca2050 says

Then why we took the sales figure in ex3 & ex4 ???

John Moffat says

I don’t think you listened carefully enough to the lecture, because I do explain 🙂

The reason is that in those examples we know what proportion of our customers will take the discount.

Also, because there are other costs and benefits involved, we need to calculate the costs and benefits over a year.

acca2050 says

I listened carefully and I still remember that. But that was confusing me.

Thanks

John Moffat says

No problem – I hope it is clear now 🙂

SOUD SAEED says

Hi Mr Moffat, forgive me asking question out if this lecture,, in december 2008 qstn no 2,, regarding factoring, when calculating the interest for the advanced payment of the face value of receivable,, the model answer was { 80%× revised recivable× (annual interest – overdraft interest rate) } ,, I was wondering why exactly they subtracted the the interest charged minus the overdraft,, they shoud rather just take the interest payment. I would really appreciate for your timely response.

John Moffat says

There is more than one way of showing the workings. If you do it the same way as in my lecture then you will end up with exactly the same net saving or net cost.

SOUD SAEED says

Thank you so much got it,,

John Moffat says

Thats great 🙂

deniseyang says

Can I ask a bit off-top question although it’s still quite much about working capital, how UNFUNDED DAYS be calculated? Is that come from A/R days + Inventory Days-Payable days?

musenge says

hi sir

In these examples you found the average receivables as Months x %age (e.g in 2nd example it was 1 x 20% ; 2 x 30% ; 3 x 50% so you got 2.3 months answer as average which you multiply by 10m and divide by 12) to come at 1916667$

I used a slightly different approach as i found the averrage receivables as

[ (1/12 x 20%) + (2/12 x 30%) + (3/12 x 50%) ] x 10mil

BUT my answer is different than yours (21666667) is my approach incorrect or this is also fine? will i get marks using the method mentioned??

Please reply sir

Thanks

John Moffat says

Your approach is fine, and it comes to exactly the same answer as mine!!!!

Check your arithmetic again – what you have written as the expression is correct, but it comes to 1916667 (not 21666667)

🙂

musenge says

Thanks sir

And yes, i did a mistake in calculating the answer

Thank you so much sir 🙂

John Moffat says

You are welcome 🙂

saulat says

regarding FACTORING , in comparison of COSTS and SAVINGS , under savings we calculate reduction in receivables (current receivables – receivables under factor) and then we multiply it with the overdraft interest cost right? like we did it ANJO and in GORWA ,current minus recivables under factor. for current we pick receivables from balance sheet , and for facotrs receivables, we normally calculate it by factors days . but in kaplan in question and aswers at the end , there is a question named MARTON, there he just didn’t make any comparison of current and new receivables, he just calculated sales * factor days /365 . and multiply it by interest cost . how ever the CURRENT RECEIVABLES are given in balance sheet …. and the receivables scenario was just same as ANJO and GORWA. well i m confuzed which one is correct ? if i do it in exam straight away receivables under factor and multiply it with o/d cost will he cut my marks ? Thank you …… kindly help me by telling , which approach should be adopted ? i m pretty much wanting to adopt the approach like in ANJO and GORWA . ?

John Moffat says

I am away from home until Thursday and I do not have Kaplan books with me. I will give you a proper reply when I get home on Thursday.

However, in general you get the marks whichever approach you take (but I will need the check the question on Thursday to check that there is nothing special in the question that you might have missed).

John Moffat says

Please put a post in the Ask the Tutor forum to make sure that I do not forget to give you an answer on Thursday 🙂

saulat says

ok sure 🙂 THANK YOU 🙂

saulat says

hey there, as in example 2 of this video lecture, there is (if its the correct word) a class of receivables who pays like 20% in 30 days, 50% in 60 days and 30% in 90 days, so u multiply the days with percentage and then collectively get number of days , and accumulatedly put in the formula of average receivables , SALES *days/365 i.e 20m *63days/365days. right ? and then make a comparison with new n old receivables , and then multiply it by an od interest rate ? right? .. i m pretty much clear with it . but i have put the same approach in december 2012 question .2 part a KXP Company. current receivables are given 2466m . for revised receivables days i did 30days *0.5 plus 45days * 0.3 plus 60days * 0.2 which gives 41days . then to calculate avg revised receivables i did 15m sales multiplied by 41days/365days. which gives me $1684932 receivables. but in the solution he seperatedly multiplied sales by evey revised days which gives an answer of $1664384 receivables. my question is what is this difference for? what is the correct approach ? as i have just followed the solution of ur example 2 of this video lecture. where am i lacking ? kindly rectify my confusion . another question that the formula of annual cost of discount according to kaplan [ 1 + discount/ amount left to pay] ^ no of periods – 1 is applicable when and where ? why we can not apply that formula in this question? and where isit there to be applied? THANK YOU …..

John Moffat says

Both approaches give exactly the same answer.

The approach you took comes to 40.5 days, not 41 days! If you use the correct 40.5 days you will get the same answer as the examiner.

The reason that you cannot use the other approach is because this only works if there is a fixed payment period – not where some pay in 30 days, some pay in 45 days and some pay in 60 days.

saulat says

Thank you ,,,,,,,,,,, , was just mistaking again in rounding off ………. !! I m clear now :). and the fixed payment period (the formula) is called the Annual cost of a discount ?. and the approach where some pay in 30 days , some in 50 days and some in 60days is called the Early settlement discount, right ? and Early Settlement Discount always requires for calculating the net cost or benefit ? right ?

John Moffat says

You are correct about calling it the annual cost of a discount.

However they are all called early settlement discount (it is a discount for paying quickly – whether everyone pays quickly or just some pay quickly)

saulat says

Thanks alot 🙂 u erased every confusion of mine regarding this 🙂

s1234 says

Sir, where are the videos for Example 4 and 5. They are missing. Please work on that too… I’ve understood receivables but due to lack of lectures of payables, i.e example 4 and 5 I no nothing about Payables. Please check it and work on it. Please!

John Moffat says

If you understand receivables, then you should have no problem with payables – it is exactly the same logic as receivables with simple discount.

There are answers to the examples at the back of the course notes, but there will not be an extra lecture recorded.

mahoysam says

That seems similar to the “relevant cost” questions in F5, yet I think much easier! Good stuff! 🙂

Zohaib says

Sir, there is always a difference between the answers of the two approaches i.e the one you set out and the formula given in KAPLAN [ 1 + discount/ amount left to pay] ^ no of periods – 1…….the cost is almost 1% different every time and it can have an impact on the overall decision….

John Moffat says

Yes – there is always a difference, and the formula you quote is more accurate.

However it has only been relevant in the exam two times ever (usually it is the more complicated discount problem which needs a different approach) and both times the examiner said he would accept the approximate method. (And both times it was only a couple of marks and did not affect the decision)

latoyah says

For example 5 in the course notes i applied the discount when calculating the new payables figure but i noticed that you did not until the end why is this? and would i be marked down in the exam for this difference. i worked it like this:

current payables: 40/365 x 100 000= 10959

New payables : 15/365 x 98.5% x 100000 = 4048

Fall in payables : 6911

Interest on new payables: 6911 x 13% = 898

value of discount 1500-898=602

Take discount due to a savings of $602 for paying early.

would i be way off mark if i worked it like this?

mariasuzanah2 says

why does these videos get stuck in the middle,like if the video takes 30 minutes it stops at 18min and some don’t play at all .am i the only one facing this problem please help me before its too late.thanks.

mariasuzanah2 says

why does these videos get stuck in the middle,like if the video takes 30 minutes it stops at 18min .am i the only one facing this problem please help me before its too late.thanks

skarotaegle says

I am struggling to understand example 4

“A supplier offers a 2% discount if invoices are paid within 10 days of receipt. Currently we take 30 days to pay invoices and therefore do not receive the discount. Calculate the annual % effective cost of refusing the discount.

The solution at the end of the lecture notes given is as follow

Effective cost = 2/98 x 100% over 20 days (30-10) = 2/98 x 365/20 x 100p.a. = 37%p.a.

Where do we get 98 from? is this 100% – 2%=98????

please anyone any comments on this?

chiclarence says

Hello sir there is this question in kaplan text on managing receivables. the way it is solved in the ext is not clear to me:

here is the question

Paisley Co has sales of 20m for the previous year and receivables at the year end of 4 million and the cost of financing receivables is covered by an overdraft at the interest rate of 12 percent per anum. it is now considering offering a cash discount of 2 percent for payments of debts within 10 days. should it be introduced if 40 percent of customers will take up the discount

here is how i solved it

receivables days = 4000000/2000000 x 365 = 73 days

if 40 percent take discount

receivables = 0.4 x10/365 x 20000000 + 0.6 x 73/365 x 20000000

= 219178 + 2400000

= 2619178

Interest on receivables = 0.12 x 2619178 = 314301

Discount allowed = 0.02 x 0.4 x 20000000 = 160000

The solution in the text says it is cheaper not to offer the discount and finance the receivables using overdraft but my answer is showing that the interest on over draft is greater than the discount allowed

skarotaegle says

Here is how I approach this example:

We assume that our receivables throughout the year is 4,000,000

So 4,000,000/20,000,000=73 days is our current receivables

New receivables

40% of the customers will take the discount and will pay us within 10 days – 10×40%=4days

60% of the customers will pay as usual at the end of 73 days – 73×60%=43.8 days

Total new recievables is 47.8 days

20,000,000 x 47.8/365 = 2,619,178 this is our new average receivables after new discount system is introduced

4,000,000 – 2,619,178 = 1,380,822 fall in av. receivables

1,380,822 x 12% = 165,699 savings p.a. after new discount introduced

P.S. scroll down the page there are few comments about the same example 😉

limkimli says

Hi, I would like to know what do we make of the 37% derived from example 4? Is the question incomplete, or do I have to make an assumption?

If my understanding is not wrong, 37% is cost that will face by suppliers to get the cash now (for working capital) by giving out discounts as oppose to borrowing from the bank and having to pay the bank’s interest rate. From a payable/client’s point of view, I will accept this discount if a banks % for overdraft is <37% so that I can borrow and pay off while benefiting from the discount of 2%…..

Please comment.

omerchamp says

sir in my understanding example 3 is about factoring not whether to give discount so why you have written we should give discount

annchen says

I have computed the savings as follows: actually we have managed to reduce our receivables only for 40% of the receipts (20% were already paying within 30 days); this means that we will obtain 40% of the sales of 20 mio 30 days earlier than normal, hence savings would be: 40% x 20 mio x 15% x 30/365 = 98k (difference to the result in the book is round 20k). Could you please advise as to where I am wrong? Thanks!

cris1993 says

Good Work Opentution,,, Just Great ! but what about payables i don’t have any grip on that ..

Talal says

Very nice ….. i have learn a lot from this lecture …

Can there be a question whether to factor or to offer discount , as far as i have done only question deciding whether to offer or not the discount or whether to factor or not …? Thank you

aelsewy says

Dear sir, u dnt talk about payables and i found questions about it and also there is something called APR it is a formula and i have different examples and after listening to the lect still i cant solve it so please reply what i can do.

Thanks.

amal123 says

There is a formula in my book

It is percentage of cost of the discount = 1-[100/100-2] x 365/20

Is it just another method of finding out if settlement discount should be taken? or is it something else ?

John Moffat says

@amal123, It is the same as what I have done in my lecture!

(Although obviously it is based on days and not months, and it is only correct if the discount is for paying 20 days earlier than otherwise)

omoworare says

cool

chicababes1991 says

dear sir,

after listening to the tuition i tried answering the following question but im not getting the correct answer. can you please help me out.

paisley co has sales of $20 million for the previous year, receivables at the end of $4 million and the cost of financing receivables is covered by an overdraft at the interest rate of 12% p.a. it is now considering a cash discount of 2% for payment of debts within 10 days. should it be introduced if 40% of customers will take up the discount??

my answer was cost of discount $160 000 and savings p.a $261699

4m/20m x 365= 73 days

73 days x 60%= 43.8 days

20m x 43.8/365= $2.4 m

new receivables

10 x 40%= 4

4/365 x 20m= $219178

2400000-219178=2180822

2180822x 12%= 261699

cost of discount 20m x 2% x 40%= $160 000

savings p.a= $261699

the answer in the book is savings of $165699

can you please tell me where is my mistake.

thanks in advance

John Moffat says

@chicababes1991, Currently receivables are 4M (we assume that they are at this level throughout the year)

The new receivables will be :

not taking discount: 60% x 73/365 x 20M = 2.4M

plus

taking discount: 40% x 10/365 x 20M = 219,178

So new recbles in total = 2400000 + 219178 = 2619178

So interest saving is 12% x (4M – 2619178) = 165699

(current recbles are 4M throughout the year. In future they will be 2619178 throughout the year. So the interest saving is 12% of the difference,)

Hope that helps.

chicababes1991 says

@johnmoffat, thank you so much sir

serina1800 says

perfect, thank you 🙂

wendy2001 says

Example 2,60% customers take advantage of the discount, precisely it makes more sense if it is 60% of sales instead of customers.

John Moffat says

@wendy2001, What you say is true, but the examiner usually words it in the same way as me 🙂

undisputed says

I am facing a challenge of not managing to download the video.

admin says

@undisputed, Videos are for watching on line, not downloading

aboobucker says

rely nice…he hs drilled it in our brain:)

tameablebunchy says

The lecturer has worked examples 4 and 5 or you can check the answers in the back of notes.

winwithascent says

@tameablebunchy, hi can you please tell me where the lecturer has worked out examples 4 and 5.

thanks

tameablebunchy says

@winwithascent, Please look at the answer to examples in the back of the lecture notes. you will see the worked example there.

vbalande says

Has anyone worked out examples 4 and 5? Just want to check if my calculations are correct 🙂

tameablebunchy says

@vbalande, Check the answer section in the back of the lecture notes.

suresh320 says

very nice, I understand the concept now..

zsolt8007 says

Calculation of the new receivables after ofering the discount in example 2 should use 99 % of the $20m (as opposed to $20m) multiplied by 54/365 as that is the new sale p.a.. Any thoughts? Thank you

tameablebunchy says

@zsolt8007,

If I understood it correctly you are trying to ascertain whether its worth giving the discount and you have to consider the full receivables, I believe the only time you use a percentage is if the question had said receivables is 20m and we have already collected 1m. Commentst anyone.

praveenkaur says

Thanks

annick says

this session was very productive

nyambira says

this is the only time i have really enjoyed my F9 through the lectures by John Moffat because i understand the concept behind and its now easier for me to tackle most questions

Thank you May God bless you

charongwa says

the decision is to employ factor not to offer discount.Really enjoying these.wil conquer F9 this time around

mosingh says

help, video stops at 7.38, is there a problem?