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atz co forecast sale in jan of 200,000 and that they will increase by 5% each month
all sales on credit , 60% customer pay after 1 month and rest paying after 2 month
what cash receipt from customer wiill be budget for in may ?In May they will received:
40% of March sales, which is 200,000 x (1.05)^2 x 40% = 88,200
and also 60% of April sales, which is 200,000 x (1.05)^3 x 60% = 138,915
So the total receipt = 88,200 + 138,915 = 227,115
kindly explain the definition of them ?
transaction motive
speculative motive
precautionary motiveAll three are explained in detail in the free lecture on the management of working capital (cash).
a company has sale 200M
currently customer take 40 day to pay
the company considering offer 1% discount for payment in 15 day and expected 60% customer take discount
what is annual effective discount ?The cost of the discount is 1/99 = 1.010101% over 25 days (40-15).
The annual cost is ((1 + 0.010101)^(365/25) -1) = 0.1580 (15.80%)
(The total sales and the fact the 60% are expected to take the discount it not relevant – it does not make the % cost of giving the discount any greater or smaller)
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