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Credit Management: Credit Policy, Analysis and Risk

HR Issue Description: Sexual harassment policy statement & procedures.

A company has hired you to recommend changes to its human resource for a complaint. Management expects that you know the relevant issues. Their goal is to implement change, bring the company to compliance, and begin the process of invoking the spirit of the law. You will create a policy and a monitoring procedure that is imminen

Credit Policy Decisions

Collins Office Supplies is considering a more liberal credit policy to increase sales, but expects that 9 percent of the new accounts will be uncollectible. Collection costs are 5 percent of new sales, production and selling costs are 78 percent, and accounts receivable turnover is five times. Assume income taxes of 30 percent a

Financial Risk Catagories

Describe the risk exposure(s) in the following financial transactions. Identify which transactions are influenced by interest rates or interest income. (CAUTION: Some can be influenced by both!) Risk Types: Interest rate risk, Credit risk, Technology risk, Foreign exchange rate risk, Country or sovereign risk Financial

Pro forma financial statements

Below are the pro forma financial statements for 2010 of your company. The owners of the company have grown sales by having a very generous credit policy. The yearend A/R balance will be $2,500,000 which is about 90 days of sales. There will also be a Notes Payable bank loan of $1,900,000 outstanding at the end of the year. The

Velcro Saddles: conclusions about credit policy

See attached file also. Jim Khana, the credit manager of Velcro Saddles, is reappraising the company's credit policy. Velcro sells on term of net 30. Cost of goods sold is 85% of sales and fixed costs are a further 5% of sales. Velcro classifies customers on a scale of 1 to 4. During the past five years,

Credit Term

Richenstein Enterprises is in the business of selling dishwashers. The firm needs $192,000 to finance an anticipated expansion in receivables due to increased sales. Richenstein's credit terms are net 40, and its average monthly credit sales are $180,000. In general, the firm's customers pay within the credit period; thus, the f

Credit Policy Evaluation

The Johnson Company sells 3,000 pairs of running shoes per month at a cash price of $90 per pair. The fi rm is considering a new policy that involves 30 days' credit and an increase in price to $91.84 per pair on credit sales. The cash price will remain at $90, and the new policy is not expected to affect the quantity sold. The

Collins Office Supplies: Credit policy decisions, receivables and inventory.

17. Collins Office Supplies is considering a more liberal credit policy to increase sales, but expects that 9 percent of the new accounts will be uncollectible. Collection costs are 5 percent of new sales, production and selling costs are 78 percent, and accounts receivable turnover is five times. Assume income taxes of 30 perce

Credit Policy Questions: Mucklehoney Example

Mucklehoney Sports operates a mail-order running shoe business. Management is considering adopting a credit policy to expand its business from an all sales for cash. The credit policy under consideration is as follows: Credit CreditNo Price per unit $35 $40 Cos

Discussion Question regarding Financial Risk Management

Financial decision making requires assessment of risk. Select terms for each category below and then define it and provide an example. 2 Risk Assessment Behavioral Methods (ex. Sensitivity Analysis) 2 ways to quantitatively assess risk (ex. Standard Deviation) 3 risk management techniques (ex. Portfolio Management)

Credit periods and credit policies

Can you help me understand these questions? 27. Lengthening the credit period _____ the price paid by the customer. Generally, this acts to _____ sales. (Points: 3) increases; increase increases; decrease decreases; decrease decreases; increase increases; have no effect on

Credit Card and Company Contracts

1) Did you know that you likely cannot sue your credit card company? Over the past 36 months you probably received an enclosure in one of your credit card bills (or a separate mailing) that was a change in the terms of your account. One of the provisions added a requirement that all complaints you have with the card issuer mus

Finance problem credit management and collection

16. Credit Policy. A firm currently makes only cash sales. It estimates that allowing trade credit on terms of net 30 would increase monthly sales from 200 to 220 units per month. The price per unit is $101 and the cost (in present value terms) is $80. The interest rate is 1 percent per month. a. Should the firm change its c

Description of Risk and Mitigation of Current Risks

Identify and research at least three current risks facing organizations engaged in international finance activities. Based on your research, prepare a paper in which you describe the identified risks and the tools that organizations could use to mitigate these risks.

Recording of Credit Sales

The following transactions took place at Dave's Wildlife Resort during May. Indicate how these transactions would be entered in a sales journal like the one shown in figure 7.2. May 1 Sold a tent and other items on credit to Roy Anderson; issued Sales Slip 1101 for $360 plus sales tax of $29. 2. Sold a backpack, an air

Credit Policy

If the company reduces its receivables without adversely affecting sales, what effect should this have on the company's cash position (1) in the short run and (2) in the long run? Which ratios would explain whether a firm's customers pay more or less promptly than those of its competitors? Which ones would suggest that a firm

Credit Policy Decision with Changing Variables

Comiskey Fence Co. is evaluating the extension of credit to a new group of customers. Although these customers will provide 180,000 in additional credit sales, 12 percent are likely to be uncollectible. The Company will also incur 15,700 in additional collection expense. Production and marketing costs represent 70 percent of sal

Credit policy Success

What kind of metrics might you use to measure the success of your company's credit policy?

Credit Policies

Our company has annual credit sales of $50 million. Bad debts are 3% of sales. Contribution margin on its sales is 30%. After my analysis, the following information about my proposed new credit policy to tighten credit policy from the current terms net 1/30 net 50 to net 30 is shown as follows: - Sales will decrease to $45

Credit policy for a company

During the meeting, my boss points out that the current level of bad debt and investment in accounts receivable are a little bit large. Apart from tightening the current credit policy, could you please suggest one way to reduce each of them if our company wants to maintain the credit policy.

Credit Standards at Magic Enterprises

Magic Enterprises is evaluating the profitability of easing its credit standards. Under its current policy, the firm extends credit only to the firms in credit risk groups 1, 2, 3, and 4. By not extending credit to groups 5 and 6, the firm estimates it loses $1,380,000 in sales annually. The firm's variable cost ratio is 0.82, a