Establishing a Pre-Set Level at Which the Decision Is Abandoned

question 36

Multiple Choice

Establishing a pre-set level at which the decision is abandoned or re-evaluated is recommended mainly to:

• A) Minimise reliance on an implicit favourite
• B) Avoid relying on mental models to recognise problems or opportunities
• C) Minimise escalation of commitment
• D) Minimise problem identification

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Definitions:

Collection Policy

The guidelines and procedures that a company follows to collect accounts receivables from its customers, including the timeline and actions for overdue payments.

Average Collection Period

The average number of days it takes for a company to receive payments owed by its customers, indicating the efficiency of a company's credit and collection policies.

Net Float

The difference between checks written against and deposited in an account, not yet cleared by the financial institution.

Cash Inflows

Money received by a business from its various activities, including sales, financing, and investments, contributing to its net cash flow.