Explain How a Company Can Use Its Credit Policy for Customers

question 19

Essay

Explain how a company can use its credit policy for customers and allowance for bad debts policies to manipulate earnings.

---

Definitions:

Inflation Rate

The tempo at which the broad cost of goods and services rises, leading to a downfall in purchasing strength.

Deflation

Deflation is a decrease in the general price level of goods and services, often associated with an increase in the purchasing power of money.

Nominal Interest Rate

The proportionate growth in the amount of money that borrowers need to repay to lenders, excluding adjustments for inflation.

Nominal Interest Rates

The interest rate prior to inflation adjustment, denoting the nominal value of interest payments.