Part ABLC Ltd. is a medium-sized UK manufacturing company based in Liverpool. The company is seeking to expand its opera...

Get help with any kind of assignment - from a high school essay to a PhD dissertation

  1. Order Custom Essay, Course Work, Research and Term Papers

ACCT Kmgt-691-1-BLC Ltd. is a medium-sized UK manufacturing company

April 14, 2018

Part A

BLC Ltd. is a medium-sized UK manufacturing company based in Liverpool. The company is seeking to expand its operations with the establishment of an office block to house the marketing and human resources staff in Manchester.

The company has narrowed the choice to two alternatives with the following net cash flow information being available:

YearProperty 1Property 2
£000s£000s
0(2,500)(2,750)
11,000900
2500700
3600800
41,000600
5900700

Items to keep in mind:

  • The company's current cost of capital is 10%.
  • For this assignment, ignore taxation.

Required

As the company accountant is currently on holiday you are required, by calculating net present value, internal rate of return and payback, to advise the company which option they should take.

You should also critically evaluate the other qualitative factors that might be taken into account in this decision.

Part B

BLC Ltd. has revenue of £500 million and sells all of its goods on credit to a variety of different wholesale customers. At the moment the company offers a standard credit period of 30 days. However, 70% of its customers (by revenue) take an average of 70 days to pay, while the other 30% of customers (by revenue) pay within 30 days. The company is considering offering a 2% discount for payment within 30 days and estimates that 80% of customers (by revenue) will take up this offer (including those that already pay within 30 days).

The Managing Director has asked the credit controller if the cost of this new policy would be worth offering. The company has a £80 million overdraft facility that it regularly uses to the full limit due to the lateness of payment and the cost of this overdraft facility is 15% per annum.

The credit controller also estimates that bad debt level of 2% of revenue would be halved to 1% of revenue as a result of this new policy.

Required

  1. Calculate the approximate equivalent annual percentage cost of a discount of 2%, which reduces the time taken by credit customers to pay from 70 days to 30 days.
  2. Calculate the value of trade receivables under the existing scheme and the proposed scheme at the year-end.
  3. Evaluate the benefits and costs of the scheme and explain with reasons whether the company should go ahead and offer the discount. You should also consider other factors in this decision. (Hint: You need to work out the cost of the discount compared to the interest on the overdraft saved and bad debt reduction.)

This assignment should be around 1,000 words and should be submitted in the form of a Business Report (approximately 500 words for each part).










OUR SERVICE CHARTER






  • 100% Confidentiality

    We mind about the interests of our clients holistically. It is for this reason that we maintain high-level confidentiality in regard to our clients’ personal information. Importantly, we use the information for purposes that relate with our services only. The only information that we require relates to our clients’ writing needs. It is also important to note that our clients’ payment information is secure with us. If there is any query in regard to the payment information, then our support team is always willing to provide any clarifications in a prompt manner. Confidentiality extends to the fact that a client made use of our services. It means that we hold our relationship with our clients in secrecy. Importantly, our confidentiality measures beat any advanced security measure that can identify any information regarding our relationship with our clients. It means that our clients transact with us freely without any fear of information leakage.

  • 100% Plagiarism-Free Guarantee

    We deliver top-quality essays through employing various measures that seek to improve the content of a given assignment. One of the quality-control systems that we use entails plagiarism checkers. These systems help us to deliver a 100% plagiarism-free papers to our clients. We also value the originality of papers, and we do not resell any submitted paper. It means that every client always gets a unique paper. Additionally, our perfect team of writers is usually keen on the academic writing standards as well as the instructions brief that a client submits. Our team of writers holds matchless competence when it comes to its service delivery. Every member of the team usually has an academic degree, and the team’s diversified skills make it possible for us to have a qualified writer in any client’s area of study. Additionally, our past clients have always given a positive feedback on each of our writers.

  • Better Grades Guarantee

    Our team of writers prides in high-level competence. The writers have the required expertise that enables them to deliver quality papers that match with the requirements of the grading rubric. In the absence of the rubric, we ensure that the writers follow the clients’ instruction brief to the letter. We can confidently assure our clients to expect nothing short of a pass from the papers that we deliver. Importantly, we have qualified writers who handle different areas of study. This diversification enables us to allot clients’ orders to the writer who is well seasoned in the subject area of study. It also enables the team to become more professional due to specialization. Our clients should put their trust in our service delivery and expect to successfully attain high grades at all times. The fact that we offer free revision reflects our dedication in delivering high quality papers that match with our clients’ expectations.

  • Money Back Guarantee

    If any of our writers deliver an incomplete or ambiguous paper that is off the topic, our clients can claim for a refund in regard to the oversight. We do not compromise our service delivery through submission of a paper that does not follow our clients’ instructions. We also mind about the interest of our customers, and we always give them value for their money. However, our clients have a choice to request for a free revision within 14-30 days, or depending on the length of the submitted paper. A client who needs a refund should send a request for it within 14 days after receiving the completed paper. If a client decides not to download the paper, then they can request for 100% refund. Any refunded amount usually goes to the client’s Bonus Balance as store credit. There is always extra compensation when the refund takes the form of store credit. Alternatively, the refunded amount can also go the client’s credit card.




Related Questions