The formula for discounted payback period is DPP = -ln (1 –
Id/C) / ln (1+d), wherein I is the initial investment, d is the discount rate,
and C is the cash flow. Substituting values, DPP = - ln(1-((0.12)($100)/$27)) /
ln(1+0.12). Therefore, DDP is equal to 5.19 years.
Answer:
I think one is borrowers who don't pay back
Then I think that interest rates falling is also one
These are the only ones I can think of. hope they help
- Katherine had to rush to the bank every few months to borrow more money. She didn't really talk to her banker about her financial situation because she had no trouble getting larger loans. You see, she was always on time with her payments. Katherine always took trade discounts to save money on her purchases. That is, she paid all of her bills within 10 days in order to save the 2% discount offered by her suppliers for paying so quickly.
- Katherine's products were mostly purchased on credit. They'd buy a few lamps and a pot, and Katherine would let them pay overtime. Some were extremely slow to pay her, taking six months or more.
- Katherine noticed a small drop in her business after three years. The local economy was struggling, and many people were losing their jobs. Nonetheless, Katherine's business remained steady. Katherine received a phone call from the bank one day, informing her that she was behind on her payments. She explained that she had been so preoccupied that she had missed the bills. The issue was that Katherine did not have enough money to pay the bank. She frantically called several customers for payment, but none of them could pay her. Katherine had a classic cash flow problem.
<h3>How is it possible to have high sales and high profits and run out of cash while running a business?</h3>
It is entirely possible if you have a high level of accounts receivables and inventory and a low level of accounts payables. A sale is recorded when an invoice is raised, and a shipment is delivered; this does not always imply that you received cash and that it is recorded in your accounts receivable. Similarly, if you keep a lot of inventory, a lot of your money is locked up until the inventory is sold. On the contrary, if your payment terms with your suppliers are less favorable, you will end up paying before your receivables convert to cash. As a result, high sales and profits do not always imply a strong cash position.
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¿ʇuǝɯʎɐd ɥʇ8 ɹnoʎ ǝpɐɯ noʎ ɹǝʇɟɐ ןɐdıɔuıɹd pıɐdun ǝɥʇ sı ʇɐɥʍ ˙5472$ sı ʇuǝɯʎɐd ןɐnuuɐ ɹnoʎ ʇɐɥʇ punoɟ puɐ uoıʇɐןnɔןɐɔ ǝɥʇ pıp noʎ ˙%7 ɟo ǝʇɐɹ ʇsǝɹǝʇuı ןɐnuuɐ ǝʌıʇɔǝɟɟǝ uɐ ʇɐ sɹɐǝʎ 51 ɹǝʌo ʇuǝɯʎɐd ʎןɹɐǝʎ ןɐnbǝ uı pıɐdǝɹ ǝq oʇ sı uɐoן ʞuɐq 000'52$ ɐ
