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Credit Management: Credit Policy, Analysis and Risk

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

Lawrence Sports Discussion Questions - Credit Policy

A. In principle how would should we decide the optimal credit policy? How should Lawrence Sports decide their optimal credit policy? b. What information is commonly used to assess the creditworthiness of a client? How can LS assess the creditworthiness of their clients? c. What are the components of a credit policy? Descri

Journalize entries for credit card sales.

Presented below are two independent situations. (a) On April 2, Julie Keiser uses her JCPenney Company credit card to purchase merchandise from a JCPenney store for $1,800. On May 1, Keiser is billed for the $1,800 amount due. Keiser pays $700 on the balance due on May 3. On June 1, Keiser receives a bill for the amount due,

Credit Policies Should you adopt either the policy? Why?

2. Your company is considering a modification to your credit policy, as follows: Policy C-1 Increases sales $5 million per year Average collection period for incremental sales = 45 days No bad-debt losses are expected. The company's variable cost of sales is 80%. Cost of capital is 20% Should

Credit Policy Key Factors

1. What are the four key factors in a firm's credit policy?How would an easy policy differ from a tight policy? Give examples how the four factors might differ between the two policies? How would the easy versus the tight policy affect sales? Profits?

Risk Analysis

How much time and resources should a firm put into risk analysis? What is at stake? Can a firm ever make a completely educated decision about market entry?

MBA Level Accounting Questions

5. Why maximization of the expected value not a valid criterion in decision making subject to risk? Under what conditions would that criterion be valid? 15. How does the adverse selection problem arise in the credit-card market? How do credit-card companies reduce the adverse selection problem that they face? To what complai

Analyze the advantages and disadvantages of consumer credit

Research predatory lending on the Internet and create an informative slide presentation that you could present at your local Rotary meeting. 1. How unethical lending companies make their money. 2. How to detect unscrupulous lending practices and companies. 3. Specific dangers, worst case and common case, of falling victim

Risk analysis

Discussion Question(s): · Read consultant notes, "CN-kf-001 Disaster Recovery Risk Analysis" about Smith Systems Consulting. Address the following questions: · What are the risks associated with each described situation? · What measures can be taken to reduce or eliminate the risk? · Wha

International Letter of credit to exporter

Please help with the following problem. The manager of the international department of the McAllen Bank learns on the way to work that the ship on which a local exporter shipped some goods has sunk. The manager has received all the documents required in the letter of credit and is ready to pay the exporter for the shipment.

Writing a Global Business Plan introducing a line of clothing in China

I am writing a paper to develop a global business plan for introducting a clothing in China. I would like to know in a business risk analysis what are the political risks, exchange risks, and market risks of introducting this clothing line in China. Can you also give me some information on legal environment, trade barriers and s

Finance Problems for a Furniture Manufacturer

Anne Teak, the financial manager of a furniture manufacturer A firm currently offers terms of sale of 3/20, net 40 As treasurer of the Universal Bed Corporation, Aristotle Procrustes is worried about his bad debt ratio Fill in the blanks in the following statements A firm has a cash surplus Sources and Uses of cash. State

Financing foreign operations - credit risk

Please work problems; formula and showing how to solve problem is most important (so I can see how to solve similar problems). Thanks Texas Computers (TC) recently has begun selling overseas. It currently has thirty foreign orders outstanding, with the typical order averaging $2,500. TC is considering the following three al

Measures of solvency and credit risk

Shown below are selected items appearing in a recent balance sheet of Kellogs products. (Dollar amounts are in the thousands) Cash and cash equivalents...$420 Investments in marketable securities...100 Receivables...1,200 Inventories...900 Prepaid expense and other current assets...250 Plant and equipment...3,100 Accoun