Original.docx - The company has started good but the sales...

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The company has started good, but the sales of the company are fluctuating. In the initial months, company has a cash surplus and the company was able to maintain minimum cash balance. Cost of sales is only 50%, which means company is having sufficient margin on sales. Company has a large proportion of credit Sales in its total sales. From the total sales, 70% are on credit and recovery of the sales requires two months. In this area company has scope to improve its cash collection. Company can improve its receivable turnover and shorten the collection period by giving some kind of discount for prompt payment. Company has no bad debts, which means all the customers make payment. So, by offering some discount on fast payment, company can reduce its collection cycle. On the other hand for purchases company can negotiate for more liberal terms for payment. Presently company is making entire payment in the next month.
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