The Optimal Credit Policy

question 248

Multiple Choice

The optimal credit policy:

• A) Is the one which minimizes the accounts receivable period.
• B) Is an all-cash policy.
• C) Is difficult to precisely determine.
• D) Ignores opportunity costs.
• E) Minimizes the carrying costs.

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Definitions:

Profitability

The ability of a business to generate earnings compared to its expenses and other relevant costs incurred during a specific period of time.

Supply Chain Coordination

The synchronization and harmonization of a company's supply chain activities, from procurement to product delivery, for improved efficiency and effectiveness.

Forecast Error

The difference between the predicted demand or trends and the actual outcomes, highlighting inaccuracies in forecasting models.

Planned Production

The forecasted or scheduled output of goods and services based on demand predictions, resource availability, and strategic objectives.