Determining the Optimal Credit Policy Is Based on a Trade-Off

question 37

Multiple Choice

Determining the optimal credit policy is based on a trade-off of:

• A) carrying costs of granting credit and making an investment in receivables.
• B) stock out costs of losing sales from not offering credit.
• C) the opportunity cost of lost sales from not offering credit.
• D) Both carrying costs of granting credit and making an investment in receivables; and the opportunity cost of lost sales from not offering credit.
• E) Both stock out costs of losing sales from not offering credit; and the opportunity cost of lost sales from not offering credit.

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Definitions:

Shift Upward

An increase in the position of a graph or line, indicating growth or rise in value.

Agriculture Organization

An entity focused on improving farming practices, supporting farmers, and promoting sustainable agriculture development.

Land Covered

An environmental or agricultural term referring to the extent, type, and use of land surface areas, including natural vegetation, urban territories, and cultivated lands.

Forests

Large areas covered predominantly with trees and underbrush, playing critical roles in biodiversity, climate regulation, and resource provision.