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  3. exercise ii. assess old and new trade credit polic

Exercise II. Assess old and new trade credit policy based on the profit and loss...

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Accounting

Exercise II.
Assess old and new trade credit policy based on the profit and loss account reconciliation method.
Collection period in days
Current trade credit policy
Buyers structure
30%
30%
25%
15%
New trade credit policy
40%
40%
20%
SO
Current sales revenues
Forecasted sales revenues
Variable expenses share
Fixed expenses value
S1
V
F
Current
Forecasted
Money market interest rate
dO d1
10
30
60
80
15
30
45
1000000
USD
1850000
USD
65%
200000
USD
Discount rate Number of days within discount
3%
7
6%
14
20%

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