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Question 2: Company XYZ, who specializes in producing T-shits, knows well that a business must...

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Accounting

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Question 2: Company XYZ, who specializes in producing T-shits, knows well that a business must earn enough to pay for all costs and still keep itself in an adequate state of liquidity. They also know that profit is an essential cost of any business activity. It must be planned and managed just like other costs of doing business. Based on the profit plan, the company expects to make $300,00 in February in T-shit sales, $340,000 in March and $365,000 in April in sales. Based on the expectation cash collection of the treasury manager, the company expected to receive at least 50% of the amount in the month of sale, 20% in the month following sale, and 30% in the second month following sale. Based on your evaluation, determine whether the collection targets are correct. Based on your evaluation, present your recommendations to the company. (10 Marks)

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