Smart Products Is Considering Changing Its Credit Terms from Net

question 47

Multiple Choice

Smart Products is considering changing its credit terms from net 30 to 2/10 net 30.The firm's financial managers need to evaluate

• A) the increased investment in accounts receivable due to increased sales.
• B) the reduced level of bad debt expense as customers pay sooner.
• C) the increased contribution margin as customers pay sooner.
• D) all of the above.

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Definitions:

Random Sample

A selected subset of individuals from a larger population, chosen randomly to represent the population in a statistical analysis.

Odds

The ratio of the probability of an event occurring to the probability of it not occurring, used in probability theory and statistics.

Sample Proportion

The fraction or percentage of the sample that displays a certain trait or characteristic, used as an estimate of the proportion in the entire population.

Logistic Regression

A statistical model that estimates the probability of a binary outcome based on one or more predictor variables, using a logistic function.