How do each of the items in a firm’s credit policy—defined to include the credit period, the discountand discount period, the credit standards used,and the collection policy—affect its sales, the levelof its accounts receivable, and its profitability?

Q: What is a sensible credit period? Should the credit period for your company's sales vary depending…

A: Credit period is the days that a customer is allowed to wait before paying the invoice. There is no…

Q: How is accounts-receivable turnover computed and what can the calculation tell the owner-manager?

A: Ratio analysis is significant for the financial position of the corporation, profitability,…

Q: What are industry benchmarks, and why are they used in the credit evaluation process?

A: The answer for the question on the industry benchmarks used in the credit evaluation process is…

Q: Please help with the calculation of Net profit margin, Gross profit margin, Current ratio, Acid test…

A: Net profit margin = Net profit (loss) / Sales Revenue = - 1410 / 5600 = - 0.25   Given Net income =…

Q: Could you explain the relationship between money, credit, and financial firms? Explain

A: A financial institution (FI) is a firm that deals with financial and monetary transactions such…

Q: The creditor is interested to know the liquidity of the company. which financial statement provides…

A: Explanation related to Liquidity ratio is given below,

Q: indicators that a company is doing an effective job at managing accounts receivable

A: Accounts receivable is the earnings of the company for which the payment has not been made by the…

Q: What is the net credit sales?

A: As per the information given,  Net credit sale = Closing balance of Trade and other receivables -…

Q: What are the advantages and disadvantages of implementing credit scoring within a financial…

A: The credit scoring is calculated by checking the payment history of an individual, credit mix,…

Q: What is the accounts receivable turnover, and what typeof information does it provide?

A: Ratio analysis, horizontal analysis and vertical analysis are the analytical tools used by the…

Q: How does credit scoring operate, and how are we as consumers and users of credit effected by it?

A: Credit Scoring - Credit scores are calculated with the help of the details of the old payment…

Q: What type of accounts are Sales Returns and Allowances and Sales Discounts?

A: Sales return and allowance accounts refers to the good returned to the business that were sold. This…

Q: which of the following source of finance relates to suppliers ? a. Commercial Paper b. Bank…

A: There are various sources of finance

Q: Describe about the trade credit procedure.

A: Trade: Trade refers to buying or selling goods and service in exchange of money or money’s worth.

Q: Discuss, in general, what it means for the brothersto set a credit and collections policy

A: Answer: Credit and collection policy refers to the laws and regulations of the company governing the…

Q: Explain how suppliers and creditors evaluate the liquidity of a client based on the customer's…

A: Introduction: The capacity of a corporation to satisfy its immediate or short-term financial…

Q: While reporting revenue, how a company should consider barter arrangement and discount?

A: Revenue Reporting: The process of accounting for revenue for a product you offer to a client is…

Q: Define Receivable Management and Credit Policies

A: Receivable Management : managing the outstanding   Credit Policies  : Selling on credit to parties…

Q: Explain why the percentage-of-receivables method is referred to as the balance sheet method and the…

A: Percentage-of-receivables method:   It is a method of estimating the bad debts (loss on extending…

Q: Why might a business prefer a note receivable to an account receivable?

A: An account receivable is a simple promise to repay the seller done by customer which is due as a…

Q: What factors affect accounts payable turnover ratio?

A: Accounts Payable ratio is calculated by dividing total supplier purchases by the average accounts…

Q: Explain how factoring works. Of what benefit is factoring to a firm that sells its receivables?

A: Lets first understand the meaning of factoring. Factoring is a selling the debtor to the factor at…

Q: What is the difference, definition, examples between account receivables and fees earned?

A: Accounting: Accounting is a system, or a process of collecting and organizing economic transactions,…

Q: Define the term Accounts Receivable Turnover?

A: Accounts receivable turnover: This is the ratio which analyzes the number of times accounts…

Q: What are the five Cs of credit? How do these serve as a yardstick for creditevaluation?

A: The “5 Cs of credit” is a system used to estimate the creditworthiness of the borrowers. The 5 Cs…

Q: Which of the following ratios (from a potential customer) would be of primary importance to a seller…

A: Formula: Earnings per share = ( Net income - Preferred dividends ) / number of outstanding shares

Q: How does company’s investment in receivables is influenced by several variables? What are the…

A: Receivables: Receivables refer to an amount to be received in future. General classifications of…

Q: How credit ratings companies evaluate and determine credit for consumers?

A: Credit rating is referred as the opinion derived from the credit agency which determines the ability…

Q: A bank that is examining the ratio of annual costs of goods sold to average inventory, is examining…

A: Financial ratios: Financial ratios are performance measurement methods used by company to Measure…

Q: Accounting Elements that affect receivables - discount, returns and valuations

A: Accounting elements that affect Receivables, discount,returns and valuations are credit…

Q: Which method, the percentage-of-receivables method or the percentage-of-credit-sales method, is…

A:

Q: Define each of the following terms:i. Credit policy; credit period; credit standards; collection…

A: CREDIT POLICY- ''Guidelines that spell out a way to decide which customers area unit sold-out on…

Q: Explain how suppliers and creditors use a customer’s payment practices to judge liquidity.

A: Introduction: Liquidity is the ability of the company to meet its immediate or short-term debt…

Q: Discuss the different types of banks deposits in respect to features, interest, cost, withdrawals,…

A: The question is based on the concept of different accounts offered by a bank. Bank accepts deposits…

Q: What is a credit limit? How does it impact credit utilization (debit-credit ratio) and why is that…

A: Credit Limit :- Credit limit is an limit of spending on an Customer or its the maximum credit can a…

Q: What is trade-off credit and collection policies and its compositions?

A: A external financing is an agreement agreement understanding between partners that facilitates the…

Q: How to compute net credit sales on a balance sheet

A: solution : How to compute net credit sales on a balance sheet? Net credit sales is the amount of…

Q: What are the key variables that influence a company’s investment in receivables?

A: The variables that influence the company investment in receivables are as follows, The level of…

Q: What does an increasing collection period for accounts receivable suggest about a firm's credit…

A: The credit policy of a firm means the policies and conditions attached to lending goods and services…