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credit limita credit restriction is the maximum amount of credit that the firm will extend at a point of time this indicates the extent of risk taken
analysis of financial ratios ratios are computed to find out the customers liquidity position and capability to repay debts the computed ratios must
analysis of credit file credit file is a compilation of each the relevant credit information of the customer all the credit information collected
once the credit information is accumulated the subsequent step is to analyze the gathered information and isolate those matters that may need further
so as to makes sure that the receivables are collected in occupied and on due date by the customers prior information of their credit worthiness must
one of the significant elements of credit management is the assessment of the credit risk of the customer as assessing risk two kind of errors
ms abc is seeing relaxing its collection efforts at current its sales are as rs40 lakhs the acp is here 20 days and variable cost to sales ratio is 8
the collection policy of a firm is intend at timely collection of overdue amount and comprises of the subsequenta monitoring the
ms abcs present credit terms are 110 net 30 that they are planning to change to 210 net 30 the current average collection period is 20 days and
cash discount is given to buyers to bring them to make prompt payment the credit terms identify the percentage discount and the period throughout
ms abc has an existing sales of rs50 lakhs and permits a credit period of 30 days to its customers the firm cost of capital is 10 and the ratio
it refers to the length of time given to the buyer to pay for their purchases throughout this period no interest is charged on the excellent amount
the current sales of ms abc are rs100 lakhs through relaxing the credit standards the firm can produce additional sales of rs15 lakhs on that bad
this variable deals along with the granting of credit on one great all the customers are granted credit and conversely none of them are granted
each company must establish its own credit policy based on the ground condition and the environment wherein it is operating the major goal of the
in the documentary bills the seller faces a lot of risk as the risk of non-acceptance or non-payment of goods this poses a main risk for the seller
open accountcredit sales are usually on open account that implies which the seller ships the goods to the buyer and afterward sends the bill
terms of payment vary broadly in practice at one conclusion if the seller has financial resources she or he may extend liberal credit to the buyers
after going through this section you must be capable toknow the need for establishing sound credit policyidentify the different credit policy
in the earlier unit we have studied how firms determine their requirements for current assets and manage their holdings in cash and marketable
in this section we have discussed the motives for conducting cash balances in addition we have discussed cash deficit or surplus situation and how it
the significant functions of a treasury department are as given belowa setting up corporate financial goals financial strategies and aim treasury
a few of the main focus areas of treasury operations are as follows1 cash flow-receipts and disbursements accelerating the collection of cash
treasury management is explained as the corporate handling of all financial matters the production of external and internal funds for business the
by electronic fund transfer the collection float can be completely removed the other benefit of electronic fund transfer is instant updating of