Evaluation of credit policy, Financial Management

Assignment Help:

Q. What is Evaluation of Credit Policy?

Evaluation of Credit Policy: - A credit policy is prepared to maintain the investment in receivables at optimum level. Receivable Turnover Ratio can be use:-

Receivable Turnover Ratio = Net Credit Sales / (Average Debtors + Average Bills Receivables)

If this ratio comes to 6, it means that the collection from receivables is being made after 12/6= 2 months. Similarly, if the ratio comes to 3, it means that the collection is being made after 12/3 = 4 months.

Average Collection Period = Months or days in a period / Receivables Turnover Ratio


Related Discussions:- Evaluation of credit policy

Charge for depreciation and amortization, Talbot Enterprises recently repor...

Talbot Enterprises recently reported an EBITDA of $8 million and net income of $2.4 million. It had $2.0 million of interest expense, and its corporate tax rate was 40%. What was i

Describe the types of hazards that is found in z department, Z works for HS...

Z works for HS Company and has been asked to undertake an assessment of any health and safety issues that might be potential hazards in the department which she manages. Z's respon

Price Earnings, what is the relationship between industry pe and comapny''s...

what is the relationship between industry pe and comapny''s pe?

Dividends paper, one page paper reviewing "the Morgan Stanley Oil and Gas R...

one page paper reviewing "the Morgan Stanley Oil and Gas Report"

Case study on labour standars, describe the impact of different types of st...

describe the impact of different types of standards on motivation, and specifically , the likely effects on motivation of adopting the labor standards recommended for geeta & compa

What are the measures of growth, What are the Measures of growth Sa...

What are the Measures of growth Sales or market share Number of products or markets Employees Profit Number of retail stores

How does accounts receivable factoring work, How does accounts receivable f...

How does accounts receivable factoring work?  What are the benefits to the two parties involved?  What are the risks? Factoring is when one firm trade accounts receivable (AR)

Estimate financing types and requirements, This case provides the opportuni...

This case provides the opportunity to match financing alternatives with the needs of different companies. It allows the reader to demonstrate a familiarity with different types

Explain the significant feature of the wealth maximisation, Explain the sig...

Explain the significant feature of the wealth maximisation The significant feature of the wealth maximisation criterion is that it considers is that it considers both the quali

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