Word Count : 727

---

To analyze whether Alpha Ltd. should relax its credit policy, we need to examine the financial implications of the proposed change on sales, costs, and the investment in accounts receivable, using the working capital management perspective. We will calculate the current profit, incremental profit from additional sales, and the cost of additional receivables, and then determine whether the net effect is positive. Current Situation: Alpha Ltd. currently sells 20,000 units at Rs. 100 each, generating total sales revenue of: [ 20,000 \times 100 = 2,000,000 \text{ Rs.} ] The variable cost per unit is Rs. 88, so total variable cost is: [ 20,000 \times 88 = 1,760,000 \text{ Rs.} ] The contribution margin per unit is: [ \text{Price} - \text{Variable cost} = 100 - 88 = 12 \text{ Rs. per unit.} ] The total contribution margin for 20,000 units is: [ 12 \times 20,000 = 240,000 \text{ Rs.} ] The average cost per unit is Rs. 92, which includes fixed costs. Total cost at current sales volume is: [ 20,000 \times 92 = 1,840,000 \text{ Rs.} ] Profit at current sales ______ _________ _________ _____ __________ ___ _________ ________ ___ _________ ______ __________.
______ ____ _______ _________ _____ ____ ___.
___ ____ ______ __________ _______.
___ _______ _________ ________ _____ ______ _________ _________ ____ ___ _______ _________.
___ ____ ______ ___ __________ ___ _______.
____ __________ _____ ___ ___ _________ ________ _________.
________ _______ ___ _____ _______ __________ _____ _______ ______.
__________ ____ _________ ___ _________.
_________ ________ _________ _________ ________ _____ ________ ________ ____ _______ ________ ______.
_______ __________ ____ _______ ________ ___ _____ _________.
___ _________ ___ _________ __________ ___ ___ ______.
____ ____ ____ ________ __________ _______ _____ ____ ___ ____ ______ ________.
_______ _______ ___ _______ _______ __________.
___ ______ ___ _______ ____ _______ _________ ______ ___.
______ ______ ___ _______ ______ __________ ________.
_______ ___ ______ _____ ________ ____ ____ _______.
_______ _________ __________ __________ ____ ________ _____ ___ __________.
______ ____ _____ _____ ______ ____ ___ _______.
____ ____ ____ ____ ___ ____ _______.
______ __________ _____ ________ _____ _______ ______ _______ ___.
_________ __________ ______ ____ ______ ___ __________ ____ ______ _______ ___ _____.
____ ______ ______ _______ _______.
______ ______ _________ __________ ____ ________.
_____ __________ _____ ________ _______ __________ ______ ___.
_______ _____ ________ __________ ______ _____ ____ ___ __________.
_______ _______ _____ _____ ___ ____ __________ _______ _______ ________ _____.
__________ ____ ________ _____ _______ _________ ________ __________ __________ __________.
______ __________ ____ __________ ____ ____ ______ ________ _____ ________ _______ _____.
_________ ________ ____ _____ _________ _____ ______ _________ _________ _______.
_______ ______ _______ __________ __________.
_______ _______ __________ ______ ____ ________ _______.
________ ___ ______ ___ _________ ________ ___ _____.
_________ ___ ________ ________ _______ ___ ______ ________ ___ _________.
_______ _____ ____ ______ __________ ______.
___ ________ ________ ________ _______ _____ ______ __________.
__________ _______ ______ ____ _______ ___ ________ ________.
_______ ________ ___ _______ ____ ______ __________.
__________ _________ _____ _____ ___ ______ __________ _____ ______.
________ ____ ____ _________ __________ __________ ___ ___.
________ _______ ____ _______ _________ ___ ___ ___ ______ ________.
_______ __________ _______ ________ __________ _____ ____ ___ _____ ____ ________.
___ _____ _______ ___ _________ _____ _____ ____ __________.
______ ____ ___ ____ _____ __________ ________ __________ _______ ___ _____ ______.
______ __________ ____ ______ _________ _________ ______.
______ ____ ________ __________ ________ ____.
______ _________ _________ ___ __________ ____ _________.
_____ ___ __________ __________ _______ ___ ______.
___ ___ ___ ________ __________ __________ ________ ________ ___.
_________ ________ ______ __________ ______ _____ ______ ______ ___ ______.
___ ___ ________ __________ ______ _______.
_______ ___ _____ _______ __________ ___ _________ _________ __________ ____ ________.
____ ______ ________ ___ ________ _____ ________ __________ ________ ____ ___.
_____ _________ ___ _________ ________ ___ ______ ______ ____ _________ ___ ______.
_____ __________ ___ _________ ________ _________.
_____ ________ ________ _______ _______ _____ ____ _______ ________ _____ ______.
__________ _____ _______ _______ ____ ____ _____.
__________ _______ ___ ______ _______ _________.
____ ____ ___ _____ __________ ___.
_________ ___ ________ __________ ________ ___ ______ _____ ______ ___ _______.
__________ _______ __________ _________ ______ __________ ______ _______.
__________ _______ ____ ___ _______ _______ __________.
______ _________ _______ ____ ______ ___ ______.
_______ _________ _______ ___ ______ _______ _______ ____ _____ ______.
____ _____ _________ ___ ______.
________ _______ _________ ______ _________ _________ ______.
Get Full Answer on WhatsApp