Question: 1. What factors determine the size of the investment a firm has in its accounts receivable? Which of these factors are under the control of the financial manager?
2. If a credit manager experienced no bad-debt losses over the past year, would this be an indication of proper credit management? Why or why not?
3. What are the risk-return trade-off associated with adopting a more liberal trade credit policy?
4. What is the purpose of holding inventory? Name several types of inventory and describe their purpose.
5. What are the assumptions made by the EOQ model?