Company default rate on account receivable when its too low, Financial Management

Assignment Help:

Can a company have a default rate on its accounts receivable that is too low?  Explain.

A company might have a default rate on AR that would be considered too low if by liberalizing credit terms a significant increase in sales revenue and cash inflows were to result.  If the enhance in the default rate is more than offset by the increase in sales revenue after all incremental cash flows are considered a positive NPV could result.

 

 

 


Related Discussions:- Company default rate on account receivable when its too low

Integration of economic, a) Globalisation refers to the interdependence and...

a) Globalisation refers to the interdependence and integration of economic, social and politic issues (services, goods, people and capital), across the world. For example, consumer

Price/yield relationship in bonds, Bond Price is the purchase value o...

Bond Price is the purchase value of a bond. It can be priced either at a premium, discount or at par. It is important for the prospective buyer to know how to det

The us pension fund system, The US Pension Fund System The US corporate...

The US Pension Fund System The US corporate pension system has matured along with the country's demographic cycle. It consists of both defined benefit plans and defined contrib

Provisions for paying off bonds, The issuer of the bond has to repay ...

The issuer of the bond has to repay the bondholders the principal by the stated maturity date. This can be repaid by the issuer in one lumpsum payment at the matu

Treasury bills or t-bills, Treasury bills are the bills, the governme...

Treasury bills are the bills, the government issues with maturity period of one year or less than one year. Treasury bills are usually issued as discount securiti

How & why does working capital affect incremental cash flow, How and why do...

How and why does working capital affect the incremental cash flow estimation for a proposed large capital budgeting project?  Explain. Several large projects require additional

Cost of redeemable preference share capital, Q. Cost of Redeemable Preferen...

Q. Cost of Redeemable Preference Share Capital? Cost of Redeemable Preference Share Capital: - Redeemable preference capital has to be returned to the preference shareholders s

Advantages of private mutual funds, Advantages of Private Mutual Funds ...

Advantages of Private Mutual Funds It is felt that the entry of private Mutual Funds would encourage competitiveness in the financial sector and promote the existing investment

Determine the weighted average cost of capital, To evaluate a company using...

To evaluate a company using enterprise discounted cash flow (DCF), we discount free cash flow by the weighted average cost of capital (WACC). The weighted average cost of capital r

State the impact on profitability of the company, State the impact on profi...

State the impact on profitability of the company Everything you do has an impact on profitability of the company(including drinking ten cups of coffee in a day!). So if you wan

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd