APT - Coppo Report on Tuesday, page-11

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mscuderi

8 Posts.

15/09/18

16:48

Post #: 35623088
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I don't believe the merchant charges are that straight forward. I know of smaller retailers using it in-store with 6.3% charge.

Originally posted by saharan ↑

It will help to put some numbers on it to see how significant a problem it could be. We know that APT charges businesses 4% of any transaction value. We also know that the customer pays 1/4th of the sale in cash and pays the renaming 3/4th is in 3 installments. Ignoring any late payments, the average repayment period is 4 weeks (average of 3 installments paid over 2, 4 and 6 weeks). Assume that the rates go up 3% over the next 3 to 5 years.

On an sale of 100 dollars APT collects $4 in its charge, call it revenue.
It then advances $75 for a period of 4 weeks. The interest cost therefore goes up by 17 cents (75x.03x4/52), 0.17% of the transaction value of $100 or a little over 4.25% of the APT revenue of $4.

While any cost increase is a negative for any business I don't think a cost increase of 4% of revenue is an unmanageable disaster.

I am not privy to APT's contingency plans but a number of solutions come to mind, such as
reduce management expenses, increase company charge from 4% to 4.17%, increase late payment fees slightly as no dollar charge can remain fixed for ever, or just take a small hit to the bottom line.

In reality there might be a mix of these plus other measures but to my mind an interest rate changes is just one of many issues any business has to manage over its life time and as the back of the envelope calculations show it is not something that will break the company.

As always DYOR and do what makes you comfortable.

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APT Price at posting: $17.27 Sentiment: None Disclosure: Held
2 Upvote

0 Great analysis

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