BUSI 2504 Study Guide - Economic Order Quantity, Operating Cash Flow, Remittance

68 views6 pages

Document Summary

Lo1 how firms manage their receivables and the basic components of a firm"s credit policies. Lo2 the distinct elements of the terms of sale. Lo3 the factors that influence a firm"s decision to grant credit. Answers to concepts review and critical thinking questions (lo2) trade credit is usually granted on an open account. B: a is likely to sell for cash only, unless the product really works. If it does, then they might grant longer credit periods to entice buyers. A: landlords have significantly greater collateral, and that collateral is not mobile. Since a"s customers turn over inventory less frequently, they have a longer inventory period, and thus, will most likely have a longer credit period as well. Since a"s merchandise is perishable and b"s is not, b will probably have a longer credit period. A: rugs are fairly standardized and they are transportable, while carpets are custom fit and are not particularly transportable.