Financial accounting

A firm currently sells 10,000 all-terrain bicycles each at a price of Rs 4,000 each. The variable cost per cycle is Rs 3,520. The firm makes all sales on credit and average collection period is 36 days. If the firm adopts a more relaxed policy sales would increase by 10 percent and the ACP will increase to 60 days. If the cost of capital is 15 percent, would you recommend the relaxed policy?

A company receives cheques worth Rs 8 lac every day, and it issues cheques for Rs 2 lac. If cheque realization periods are 8 days and 5 days respectively, what will be the cash balance after 15 days? Assume that the initial cash balance is Rs 12 lac.

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