If a firm's current ratio and quick ratio have been steadily decreasing, the underlying cause might be traced to their credit manager's relaxed attitude about enforcing prompt payment from customers

Q: A change in credit policy has caused an increase in sales, an increase in discounts taken, a…

A: A CREDIT POLICY DECIDE WHO IS ELIGIBLE FOR CREDIT FROM YOUR COMPANY AND DETERMINES HOW YOU WILL…

Q: How did Office Smart increase its market share—possibly by lowering credit st

A: : Credit standards: Credit standards can be defined as a set of guidelines existing in the company…

Q: In the credit market model with asymmetric information, determine how a consumer will respond to an…

A: Asymmetric information In credit market, asymmetric information means the lenders or the borrowers…

Q: Which of the following change in regulations is most likely to improve internal market efficiency…

A: Market is considered as efficient only if: Intrinsic Value = Stock price Stock prices fully relects…

Q: Credit markets are driving long-term changes in banks. Forces that combined to lead to a…

A: Cost of credit depends on quality of credit provided.

Q: TRUE OR FALSE 1. Short-term financial policies that are flexible with regard to current assets…

A: 1. Short-term financial policies that are flexible with regard to current assets includes keeping…

Q: What is the effect of extending the collection period for accounts receivable? The collection cost…

A: By extending the collection period, Debtors will be encouraged to purchase more and may eventually…

Q: Which of the following is not among the consequences of a loose credit policy ?     a) Sales…

A: Introduction: A loose credit policy refers to a credit policy intending to increase the money supply…

Q: f a bank's credit ratings decrease, How does this affect borrowers, lenders, and financial…

A: Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: Which of the following statement is true ?   Answer choices : I. Increase in collection of cash…

A: Inventory- Inventory, like cash, bank deposits, and accounts receivable, is a current asset. The…

Q: tatement I - Relaxation of Credit Standard increases the Investment in Accounts receivable Statement…

A: Comment- We’ll answer the first question since the exact one wasn’t specified. Please submit a new…

Q: increasing collection period for trade receivable suggest about a firm’s credit policy

A: The average collection period is the average number of days required to collect invoiced amounts…

Q: Which of the following is true? a. If the payment term of n/20 shifted to 5/10, n/20 to start…

A: Solution:- Cash discount means the discount offered by the entity to its customers is they pay…

Q: Does its management typically have complete control over a firm’s credit policy? As a general…

A: SOLUTION:- Management does not have complete control over a firm's credit policy as credit policy is…

Q: an example of how the factors in a firm's credit policy might differ between relaxed and restrictive…

A: Answer: The company’s credit policy consists of the following four key factors like credit period,…

Q: 7.- What are the likely effects on sales of the following change in credit policy: A) Lower the…

A: "Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Which of the following statements is true? O As a general rule, management would want to reduce the…

A: Several statements have been given about the average collection period. We have to find the correct…

Q: Which of the following statements is correct? A firm has a greater likelihood of needing an…

A: The following statement is correct

Q: Suppose customers express greater satisfaction with the accuracy of their charge account bills but…

A: A balanced scorecard seems to be a strategic performance management statistic that assists…

Q: Making changes to a firm’s credit policy involves trade-offs. Assuming that all other factors remain…

A: Cash discount means giving discount for the customers who are paying amount immediately or before…

Q: Why is it that oftentimes banks refuse to lend to many borrowers even though they offer high…

A: Analysis of the given option: i) To reduce the exposure to diversification risk Remark-By…

Q: Which is correct with regards to the effects of restricting credit standards? a. Investment in…

A: Restricting credit standard means company strict the credit policy. When company is more concerned…

Q: If we hold all other factors the same, an increase in interest rates will: a.

A: Option (a). Decrease the present value of a stream of constant payments we expect to receive.

Q: QuickBank has decided to lower the interest rate it charges on business loans in order to attract…

A: Adverse Selection: It is a problem Created when there is asymmetric information before a transaction…

Q: All of the following may be considered causes of the “dark side” of credit except: Group of answer…

A: Following may be considered causes of the “dark side” of credit: Operational issues that affect…

Q: Which of the following statements is most correct? JUST EXPLAIN ONE ANSWER WHICH IS INCORRECT. In…

A: Statement 1 is most correct

Q: Suppose a company’s current credit terms are 1/10,net 30, but management is considering changingits…

A: The original credit terms were: 1/10, net 30. It means that if a customer pays within 10 days, then…

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…

Conversion Cycle

Conversion cycle is also known as cash cycle or net operating cycle. Conversion cycle refers to how much time a company takes to turn its investments which is done from stock or any other financial resources into cash flows from sales.