We are here with you hands in hands to facilitate your learning & don't appreciate the idea of copying or replicating solutions. Read More>>

Looking For Something at vustudents.ning.com? Click Here to Search

www.bit.ly/vucodes

+ Link For Assignments, GDBs & Online Quizzes Solution

www.bit.ly/papersvu

+ Link For Past Papers, Solved MCQs, Short Notes & More


Dear Students! Share your Assignments / GDBs / Quizzes files as you receive in your LMS, So it can be discussed/solved timely. Add Discussion

How to Add New Discussion in Study Group ? Step By Step Guide Click Here.

Discussion Question

Regional Textile Limited (RTL) purchases raw material from various vendors with an average payment period of 45 days. Most of the sales are on credit and average collection period is 50 days.  There is a gap between the cash collection and payment as the management is unable to recover debts within 45 days.


Required

What measures can be taken by RTL to reduce the above stated gap ?

 

 Maximum words =  25 

total numbers = 2 

time duration = 48 hours (22 to 23 October 2012)

 

+ How to Follow the New Added Discussions at Your Mail Address?

+ How to Join Subject Study Groups & Get Helping Material?

+ How to become Top Reputation, Angels, Intellectual, Featured Members & Moderators?

+ VU Students Reserves The Right to Delete Your Profile, If?


See Your Saved Posts Timeline

Views: 750

.

+ http://bit.ly/vucodes (Link for Assignments, GDBs & Online Quizzes Solution)

+ http://bit.ly/papersvu (Link for Past Papers, Solved MCQs, Short Notes & More)

+ Click Here to Search (Looking For something at vustudents.ning.com?)

+ Click Here To Join (Our facebook study Group)

Replies to This Discussion

plz send the solution of gdb as soon as

Listen 1st three lectures and discuss here.........

Please Discuss here about this GDB.Thanks

RTL should negotiate with the vendors to enhance payment period as 50 days or above. Or

RTL should increase its sale volume to gain maximum profit and this profit should not distribute among shareholders and should cover the payment gap with vendors.

another Solution:

 

 

RTL have to get/secure money from banks in terms of loan and have to pay to creditors on 45th day. When RTL recover it from debtors this will be used in settling in their loans, but there is additional cost incurring and that is interest. When we get loans from banks we have to pay the interest.

 Masood Khan gud 

Fin622 1st GDB Idea Solution Fall 2012

Take it idea only and make it your own... 

Find Attatchment...

Thanks...

Fall Semester 2012

“Corporate Finance (FIN622)”

(GDB) Idea Solution

By Sahar Afshan

 

Working Capital Management


Discussion Question

Regional Textile Limited (RTL) purchases raw material from various vendors with an average payment period of 45 days. Most of the sales are on credit and average collection period is 50 days.  There is a gap between the cash collection and payment as the management is unable to recover debts within 45 days.


Required

What measures can be taken by RTL to reduce the above stated gap?

 

 

 

Solution:

 

 

RTL have to get/secure money from banks in terms of loan and have to pay to creditors on 45th day. When RTL recover it from debtors this will be used in settling in their loans, but there is additional cost incurring and that is interest. When we get loans from banks we have to pay the interest.

Clear and Concise....

 

To reduce gap they should secure short term loans from the banks, which could be repaid when they receive the cash from
debtors.  

 

hope it will be the right answer....

RTL should negotiate with the vendors to enhance payment period as 50 days or above. Or
RTL should increase its sale volume to gain maximum profit and this profit should not distribute among shareholders and should cover the payment gap with vendors.

 Clear and Concise....

To reduce gap they should secure short term loans from the banks, which could be repaid when they receive the cash from
debtors.

RTL have to get/secure money from banks in terms of loan and have to pay to creditors on 45th day. When RTL recover it from debtors this will be used in settling in their loans, but there is additional cost incurring and that is interest. When we get loans from banks we have to pay the interest.

.:: FIN622 – Corporate Finance ::.

 

Working Capital Management

 

Discussion Question

 

Regional Textile Limited (RTL) purchases raw material from various vendors with an average payment period of 45 days. Most of the sales are on credit and average collection period is 50 days.  There is a gap between the cash collection and payment as the management is unable to recover debts within 45 days.


Required

What measures can be taken by RTL to reduce the above stated gap?

 

Solution:

 

RTL have to get/secure money from banks in terms of loan and have to pay to creditors on 45th day. When RTL recover it from debtors this will be used in settling in their loans, but there is additional cost incurring and that is interest. When we get loans from banks we have to pay the interest.

 

Alternate Solution:

 

RTL should negotiate with the vendors to enhance payment period as 50 days or above. Or
RTL should increase its sale volume to gain maximum profit and this profit should not distribute among shareholders and should cover the payment gap with vendors.

FOR CONCEPTS TOPIC FROM HANDOUTS

Current liabilities are those short-term liabilities which are intended to be constantly replaced in the
normal course of trading activity. Current liabilities typically comprise: trade creditors, accruals and bank
overdrafts.
There is another concept of Cash Cycle associated with working capital. Take a compact example to
understand.
You acquire goods or raw materials from vendors on credit. It takes time (say in days) to process or
transform raw materials to finished goods, which are sold to customers on credit. Customers or Debtors
are allowed a time period (in days) to settle or pay their bills and money received from debtors is used to
pay off creditor, who provided goods on credit. Let’s assume you allowed your customers 30 days to pay
for goods you sold to them on credit. And on the other hand you sought 35 days cushion from creditors to
pay off purchases of raw materials. 

In this simple example you were still able to use money for 5 days
before paying to creditors. This means the operating cycle is positive.
Other concepts from financial statements shall be taken up in the next hand out.

RTL have to get/secure money from banks in terms of loan and have to pay to creditors on 45th day. When RTL recover it from debtors this will be used in settling in their loans, but there is additional cost incurring and that is interest. When we get loans from banks we have to pay the interest.

 

RSS

Latest Activity

Siddiq khan kakar replied to + M.Tariq Malik's discussion Instructions About Mid Papers For Newly Admitted Students:
17 minutes ago
Rana Ali commented on Isha Chuhdary's blog post Moka
26 minutes ago
Rana Ali liked Isha Chuhdary's blog post Moka
26 minutes ago
Butt G updated their profile
39 minutes ago
Rana Ali replied to Rana Ali's discussion تمہیں دل لگی بھول جانی پڑے گی
45 minutes ago
+ ! ❤SΕNSΙТΙVΕ(∂ΕSΕЯТ ΡЯΙNCΕSS)❤ replied to +¢αяєℓєѕѕ gιяℓ's discussion Galat fehmi..
55 minutes ago
+ ! ❤SΕNSΙТΙVΕ(∂ΕSΕЯТ ΡЯΙNCΕSS)❤ liked +¢αяєℓєѕѕ gιяℓ's discussion Galat fehmi..
55 minutes ago
Profile Iconsanaakram, junaid farid, Sundas Shaban and 5 more joined Virtual University of Pakistan
58 minutes ago
Mani Siddiqui BS VIII posted a status
"انسانی اِیجادات میں خطرناک ایجاد عارضی انسانی تعلقات ہیں"
6 hours ago
Madeha Naqvi liked fairy's discussion QUIZ NO 1:
7 hours ago
hafsa badar posted a discussion
7 hours ago
Saqib liked +¢αяєℓєѕѕ gιяℓ's discussion Galat fehmi..
8 hours ago

Today Top Members 

© 2019   Created by + M.Tariq Malik.   Powered by

Promote Us  |  Report an Issue  |  Privacy Policy  |  Terms of Service

.