Compare these two investments: Which one is the better investment? Which one earns a higher return on investment? And which is the best investment option? (Compute) ROI A. Jelmer invested Php1,000,000.00 investment to Elemenopi Company that earns Php 50,000.00 in interest a year. B. Jelmer invested Php 200,000.00 investment to KyuarestiCompany that earns Php 15,000.00 in interest a year. Case on Working Capital Britany is a distributor of native bags. Her business is 2 years old with an annual profit of Php 10,000,000. He operates with a bank overdraft of Php 3,000,000. She won a contract to supply native bags to Kyuareste Company but will be paid 120 days after delivery. She calls his supplier Joseph Aguila and orders for the native bags to fulfil the contract in the starting months. Month 1 Transactions go on well and all the Suppliers deliver the orders as promised but he is short of space to store them. Month 2 Business is still good. He makes his first delivery to the Kyuareste Company which increases his overdraft. Month 3 Britany is in a ditch. She has made more deliveries to the Kyuareste Company but his overdraft is at the limit and is getting calls from unpaid suppliers. Month 4 Britany is in a crisis. She cannot pay all the suppliers. Some suppliers stop delivering and threaten legal action. However, she thinks the situation will stabilise since he is still supplying the Kyuareste Company. Month 5 His overdraft is 5,000,000 over the limit. Two suppliers start legal action. The bank refuses to pay anymore cheques. Luckily enough she receives her first payment from the Kyuareste Company. Month 6 The subsequent payments from the Kyuareste Company delay and he cannot fulfil any more orders. The bank demands for payment of the overdraft within 10 working days. Britany closes business and blames the bank. 1. Imagine you are Britany; how would you have managed the situation differently? 2. Suppose you are the bank, what prior information would you have given to Britany before taking the bank overdraft?

Public Answer

RHOZDH The First Answerer