Multitech Limited

Particulars Rs in million
Sales 800
credit period 30 days
cash discount 1/10 net 30
credit : cash sales 07:03
50% of credit cutomers avail cash discount
contribution margin ratio 0.2
tax 30%
post tax Kc 12%
ACP 20 days

IMPACT OF RELAXING CREDIT STANDARD ON RESIDUAL INCOME(RI) Rs in million

Incremental Sales Rs 50 million

Bad debt losses on incremenetal sales 12%

2800000
Change in RI 2533333.333

IMPACT OF EXTENDING CREDIT PERIOD ON RESIDUAL INCOME(RI) Rs in million

5600000
Change in RI -3066666.667

IMPACT OF RELAXING CASH DISCOUNT POLICY ON RESIDUAL INCOME(RI) Rs in million

Change in RI 8177777.778

Increase in discount cost 74800000

Change in RI -48578666.67