What are the five Cs of credit? Explain why each is important? 2. What are some of the factors that determine the length of the credit period? Why the length of the buyer’s operating cycle often considered an upper bound on the length of the credit period? 3. In each of the following pairing, indicate which firm would probably have a longer credit period and explain your reasoning. a.Firm A sells a miracle cure for baldness; Firm B sells toupees. b. Firm A specializes in products for landlords; Firm B specializes in products for renters. c. Firm A sells to customers with an inventory turnover of 10 times; Firm B sells to customers with an inventory turnover of 20 times. d. Firm A sells fresh fruits; Firm B sells canned fruit. e. Firm A sells and install carpeting; Firm B sells rugs. 3. If a company’s inventory carrying costs are Php 5 million per year and its fixed order costs are Php 8 million per year, do you think the firm keeps too much inventory on hand or too little? Why? 4. At least part of Apple’s corporate profits can be traced to its inventory management. Using just-in-time inventory, Apple typically maintains an inventory of three to four days’ sales. Competitors such as Hewlett-Packard and IBM have attempted to match Apple’s inventory policies, but lag far behind. In an industry where the price of PC components continues to decline, Apple clearly has a competitive advantage. Why would you say that it is to Apple’s advantage to have such a short inventory period? If doing this is valuable, why don’t all other PC manufacturers switch to Apple’s approach?
- What are the five Cs of credit? Explain why each is important?
2. What are some of the factors that determine the length of the credit period? Why the length of the buyer’s operating cycle often considered an upper bound on the length of the credit period?
3. In each of the following pairing, indicate which firm would probably have a longer credit period and explain your reasoning.
a.Firm A sells a miracle cure for baldness; Firm B sells toupees.
b. Firm A specializes in products for landlords; Firm B specializes in products for renters.
c. Firm A sells to customers with an inventory turnover of 10 times; Firm B sells to customers with an inventory turnover of 20 times.
d. Firm A sells fresh fruits; Firm B sells canned fruit.
e. Firm A sells and install carpeting; Firm B sells rugs.
3. If a company’s inventory carrying costs are Php 5 million per year and its fixed order costs are Php 8 million per year, do you think the firm keeps too much inventory on hand or too little? Why?
4. At least part of Apple’s corporate profits can be traced to its inventory management. Using just-in-time inventory, Apple typically maintains an inventory of three to four days’ sales. Competitors such as Hewlett-Packard and IBM have attempted to match Apple’s inventory policies, but lag far behind. In an industry where the price of PC components continues to decline, Apple clearly has a competitive advantage. Why would you say that it is to Apple’s advantage to have such a short inventory period? If doing this is valuable, why don’t all other PC manufacturers switch to Apple’s approach?
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