Identify the components of the credit policy of a business firm from the following: (1) Collection…
A business firm's receivables management and credit policy consists of three core decision variables: (5) Terms of sale (credit period and cash discount terms), (4) Credit…
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Identify the components of the credit policy of a business firm from the following:
(1) Collection policy
(2) Factoring
(3) Credit rating
(4) Credit analysis
(5) Terms of sale
Answer and explanation
Correct answer B
A business firm's receivables management and credit policy consists of three core decision variables: (5) Terms of sale (credit period and cash discount terms), (4) Credit analysis (evaluating customer creditworthiness and setting credit standards/limits), and (1) Collection policy (procedures for collecting overdue accounts). Thus, '1, 4 and 5 only' is correct.
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UGC NET Commerce