In: Accounting
KOMSIS TRADING CO is a Turkish Company who imports MUSIC-SETS
from China. KOMSIS is going decide...
KOMSIS TRADING CO is a Turkish Company who imports MUSIC-SETS
from China. KOMSIS is going decide on options of this import. For
realization of import KOMSIS will have different options on
financing.
Now, you are preparing a presentation to the Board of the
company. They will listen to your presentation and decide on which
is the best option.
You are the Finance Manager and you will
present the expected costs and possible revenues from this
deal. Please explain, make comparison of all financing options in
detail and propose the board, the most profitable option.
GENERAL TERMS
- The music sets have same configuration. No variaties in
configuration.
- KOMSIS has strong financial reputation in the market and a very
good network in the country to sell the goods with good profit
margin.
- KOMSIS can sell goods in TL or Foreign Currency (FCY).
- KOMSIS doesn’t have any problem to sell the music sets. They
can sell them any time, with any method which is more profitable
for them. Importing is the same, they can make imports with any
method they want.
IMPORT DETAILS
- KOMSIS is buying 10.000 music sets , cost per set is $ 400
FOB.
- Transportation of the music sets from China to Turkey will cost
$ 112.750 It is payable at Documents Receipt date by Akbank , in TL
countervalue of $ amount.
- Insurance will be $ 40.250 which is also payable at document
receipt date and in TL.
- All costs will be paid by KOMSIS.
- Transportation from airport to company warehouse will cost TL.
15.000
- Customs taxes and duties will be TL.665.000
- Transaction date is March 01. Everything will be settled on
March 01.
FINANCING
- KOMSIS has 2 options of financing in their hand. Now management
will decide on which transaction they will go for.
- Please use correct Foreign Exchange rate provided below for
your calculations
- KOMSIS is working with AKBANK. They do not have any financing
issues. They have enough money with the bank.
- In this environment, there are no other taxes
except Corporate/Income Tax of domestic sales profit.
You dont need to calculate the Corporate tax.
CHOOSING BEST FINANCING OPTIONS
- CASH AGAINST DOCUMENTS
- Seller wants Cash Against Documents payment on the transaction
date.Documents are received by the bank on March 01.
- Therefore transaction date is March 01,2018
- AKBANK charges flat commission % 4.5 —for transfer. Transfer
will be done on transaction date March 01.
- KOMSIS will pay all amounts from their TL account with AKBANK (
They have enough money in their account .)
- LETTER OF CREDIT
- Komsıs is working with Akbank. Akbank charges following costs
during L/C :
- L/C Opening commission 0.5 pct ( 0.005 )
- L/C Payment commission 1 pct (0.01)
- SWIFT Charges $ 5 per message. ( Total 10 messages
)
China Company is working with Bank of
China. They are charging following costs
- L/C Advising Commission 1 pct ( 0.01)
- L/C Documents Reviewing Commission 0.5 pct ( 0.005 )
- SWIFT Charges $ 7 per message ( 20 messages )
- AKBANK will charge KOMSIS $ 25.000 commission for payment to
Chinese bank. Akbank will also charge $ 15.000 for themselves.
- Transferred amount and all other charges will be collected from
KOMSIS’s Akbank account in Turkish Lira.
- Transaction date is : March 01,2018
QUESTION : WHICH OPTION IS BETTER ?
SALE PRICE CALCULATION WHEN
GOODS ARE SOLD
- Goods will be sold to a client with % 50 profit margin
calculated on CIF value of the goods.
QUESTION : WHAT IS THE SALE PRICE OF IMPORTED GOODS
?
DISCOUNTING CHEQUE
- The customer pays in USD. by a cheque maturity 1 year.
Komsis takes this cheque to a factoring company for
discounting.
- Factoring company applies % 6 discounting rate to the
face value of the cheque. They also charge % 1.5 commission on the
cheque amount.
- They will pay Komsis in $.
QUESTION : A. What is the discounted value of the cheque
?
B. How much will factoring company pay to Komsis ?
FORIGN CURRENCY EXCHAGE
|
|
|
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FX RATES
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BANK NOTE RATES
|
USD / TL
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DATE
|
BUY RATE
|
SELL RATE
|
BUY RATE
|
SELL RATE
|
|
01.03.2018
|
3,8082
|
3,8150
|
3,8055
|
3,8208
|