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Assignment No. 1
Due Date: 30th-July-2018

Marks: 10


Learning Objective:
The purpose of this activity is to develop skills in students related to debtor administration in
working capital management.

Learning Outcome:
This activity will help students to learn how offering discount to debtors can help reducing debtor
administration cost of any company.

Question:
A manufacturing company has decided to reduce its average collection period. The current sales
level is Rs. 25 million and existing credit terms are 45 days. The existing volume of debtors is Rs.
3,125,000. The company is intending to offer discount to its existing customers for early recovery
of accounts receivable. Department for debtor administration is working out discount level that
must be offered to debtors for early payment. Following two proposed plans are under
consideration:

Plan A: Offer 5% discount to customers if they pay within 7 days. According to estimates,
45% of customers will avail this opportunity.

Plan B: Offer 2% discount to customers if they pay within 15 days. According to estimates,
60% of customers will avail this opportunity.

Requirement: If Return On Investment (ROI) of the company is 25%, calculate the net
saving/loss under each proposed discount policy and advise which policy should be accepted?
(Assume 360 days a year)

Important Instructions:
24 hours extra / grace period after the due date is usually available to overcome uploading
difficulties. This extra time should only be used to meet the emergencies and above mentioned
due dates should always be treated as final to avoid any inconvenience.
OTHER IMPORTANT INSTRUCTIONS:
Please also read the following instructions carefully before attempting the assignment solution.
DEADLINE:
• Make sure that you upload the solution file before the due date. No assignment will be
accepted through e-mail after due date once the solution has been uploaded by the
instructor.
FORMATTING GUIDELINES:
• Use the font style “Times New Roman” or “Arial” and font size “12”, double spaced.
• It is advised to compose your document in MS-Word format.
• You may also compose your assignment in Open Office format.
• Use black and blue font colors only.
RULES FOR MARKING:
Please note that your assignment will not be graded or graded as Zero (0), if:
• It is submitted after the due date.
• The file you uploaded does not open or is corrupt.
• It is in any format other than MS-Word or Open Office; e.g. Excel, PowerPoint, PDF etc.
• It is cheated or copied from other students, internet, books, journals etc.
Note related to load shedding: Please be proactive
Dear students,
As you know that semester activities have been started and load shedding problem is also
prevailing in our country nowadays. Keeping in view the fact, It is requested to all of you to
manage to post your activities as early as possible and don’t wait for the due date. For your
convenience activity schedule has already been uploaded on VULMS for the current semester,
therefore no excuse will be entertained after due date of assignments, quizzes or GDBs.

Views: 1155

Replies to This Discussion

need sol please anyone upload sol

any idea????

today is last day of submition please anyone help

laraib ap ka course kn sa ha?

tehreem ap ka course kn sa ha

kindly share the FIn622 assigment solution 1 due date 30 july 2018

abi tk ksi ny help ni ki

thanks alot

Here is the solution of 1st assignment

Attachments:

thanks alot

han please

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