Which of the Following Conditions Must Exist for a Firm

question 1

Multiple Choice

Which of the following conditions must exist for a firm to make a change in its existing credit policy?

• A)Days sales outstanding (DSO) must decline if the new policy is implemented.
• B)Bad debts must decrease if the new policy is implemented.
• C)The new policy's net present value (NPV) must be both positive and greater than the existing policy's NPV.
• D)Sales must increase if the new policy is implemented.
• E)The firm's variable costs should decrease if the new policy is implemented.

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Definitions:

Unemployed People

Individuals of working age who are without work, but are available for and seeking employment.

Globalization

The process of interaction and integration among people, companies, and governments worldwide, which has been accelerated by advances in transportation and communication technology, with significant implications for economies, culture, and political systems.

Hourly Wages

The amount of money paid to an employee for one hour of work.

Income Effect

Variations in the income levels of individuals or economies and the resultant effects on the demand for goods or services.