What Should a Firm Do After Establishing a Credit Policy

question 82

Multiple Choice

What should a firm do after establishing a credit policy?

• A) decide what should be done for those customers who do not pay their accounts on time
• B) monitor its accounts receivable to analyze whether its credit policy is effective
• C) decide on the length of the period before payment must be made
• D) determine what percent of monthly sales are collected in the month after that sale

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Definitions:

Saving Distortions

Alterations in the savings behavior of individuals or institutions due to external influences, such as tax policies or inflation.

Real Interest Income

The income from interest after adjusting for inflation, reflecting the true purchasing power of interest earnings.

Nominal Interest Income

The income earned from investments or savings before adjusting for inflation, expressed in the current currency.

Money Supply

The sum quantity of financial assets in an economy at a particular instant.