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Credit policy and company risk

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Does a firm face any risks if it tightens its credit policy?

If a company reduces its DSO without seriously affecting sales, what effect would this have on its cash position (1) in the short run and (2) in the long run?

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This solution provides the learner with an enahanced understanding of the company risk associated with its credit policy.

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A distributor selling its products to a troubled retailer may attempt to lessen credit risk by tightening payment terms or by actually selling fewer products on credit to the retailer, or even cutting off credit entirely, and demanding payment in ...

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