Homework answers / question archive / King Company presents the following information: a) Annual credit sales: P 25,200,000 b) Collection period: 3 months c) Rate of return: 12% King company considers changing its credit term from n/30 to 3/10, 1/30

King Company presents the following information: a) Annual credit sales: P 25,200,000 b) Collection period: 3 months c) Rate of return: 12% King company considers changing its credit term from n/30 to 3/10, 1/30

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King Company presents the following information:

a) Annual credit sales: P 25,200,000

b) Collection period: 3 months

c) Rate of return: 12%

King company considers changing its credit term from n/30 to 3/10, 1/30. The following are expected to result: (1) 30% of its customers will take advantage of the discount; (2) sales will remain constant, (3) the collection period is expected to decrease to two months

REQUIRED: What is the net advantage (disadvantage) of implementing the proposed discount policy?