Credit investigation, Managerial Accounting

Assignment Help:

Once the credit information is accumulated the subsequent step is to analyze the gathered information and isolate those matters that may need further investigation. The factors which affect the extent and nature of credit investigation are given as:

  • Category of customer, whether new or existing
  • The customer's background, business line and the related trade risks
  • The nature of products-perishable or seasonal
  • The size of the customer's demand and expected additional volume of business with him or her
  • Company's credit practices and policies
  • Capacity: Capacity refers to the capability of the buyer to pay the due on time and is generally judged through the past turnover and the repayment behaviour
  • Character: Character considers as the willingness of the buyer to pay. The character of the buyer is usually judged by his or her past record of payments and default history if any.
  • Collateral: it implies that the security against the credit granted to customers. A buyer willing to furnish sufficient collateral is judged as more creditworthy as compared to buyers who are not capable to furnish any collateral.
  • Conditions: this is here referring to the sensitivity of the buyer to common economic environment.

Related Discussions:- Credit investigation

Example of credit period, M/s ABC has an existing sales of Rs.50 lakhs and ...

M/s ABC has an existing sales of Rs.50 lakhs and permits a credit period of 30 days to its customers.  The firm cost of capital is 10% and the ratio of variable cost to sales is 85

What is the flexible budgets, What is the Flexible budgets  A flexible ...

What is the Flexible budgets  A flexible budget consists of a series of budgets for different level of activity. It therefore varies with the level of activity attained. A flex

MAKE OR BUY DECISIONS , MAKE OR BUY DECISIONS (NO LIMITING FACTORS) The...

MAKE OR BUY DECISIONS (NO LIMITING FACTORS) The choice between making and buying a given component is one which is likely to face all businesses at some time.  It is often one

Difference between direct labour and indirect labour, Difference between Di...

Difference between Direct labour and Indirect labour Direct labour:- Labour which plays an active and direct part in the production of a particular commodity is called di

Explain briefly about life cycle costing, LIFE CYCLE COSTING Introduc...

LIFE CYCLE COSTING Introduction Life cycle costing as its name implies costs the cost object i.e., product project etc. over its projected life. It is used to explain a s

Illustrate what the traffic can bear pricing, What the traffic can bear pri...

What the traffic can bear pricing Pricing based on what the traffic can bear is not a sophisticated method. It is used by retail traders as well as by some manufacturing firms.

Feedback control system, Feedback Control System Feedback is informatio...

Feedback Control System Feedback is information about actual achievements or actual results produced within the organization (e.g. management control reports) with the purpose

What are selling and distribution expenses, What are Selling and distributi...

What are Selling and distribution expenses? Selling and distribution expenses incurred for the marketing of a commodity, for securing orders for the articles, dispatching goods

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