What is Accounts Receivable?Although many professionals do not know, accounts receivable is a part of working capital, and it is shown in the balance sheet in the current assets. As this is an investment, AR should be counted as a net realizable value. We get the net realizable value when ... Read More

Features of Optimum Credit PolicyThe optimum credit policy of an organization represents the best credit efforts to maximize the returns from the use of the policy as a marketing tool. Usually, it depends upon the organization as to how much control over the credit policy must be exerted.A too-tight credit ... Read More

Businesses provide credit to their customer for various reasons. In fact, credit can be used as a marketing tool by companies. In order to do so, a company must look at the maximization of profits via incremental sales. However, it is easier said than done.This is so because, in order ... Read More

What are Credit Policy Variables?Credit policy variables are an essential feature of every credit policy. These variables impact the credit policy directly or indirectly. Since the variables have the power to make or break a credit policy they are considered indispensable while forming and executing the credit policy. Management of ... Read More

Credit Policy: DefinitionCredit policy is mainly dependent on the volume of credit sales and the collection period. The volume of credit policy is a function of a company’s gross sales and the percentage of credit sales to total sales. Total sales of a company depend on many factors, such as ... Read More

LiquidityThe liquidity and profitability of a company are directly related to the working capital. When a company maintains high temporary working capital in current assets, it is known to be more liquid. The companies that maintain a lower level of working capital are known as less liquid.Companies that maintain higher ... Read More

What is Credit Policy?The credit policy of a firm is a marketing tool or it can be used as a marketing tool to expand the business. A firm that has a good credit policy in place is advantageous among its peers in the industry. Buyers would prefer a seller that ... Read More

The credit policy is an important tool to improve the selling efforts of a company. However, before discussing about credit policy, it is important to first understand about trade credit and its characteristics.What is Trade Credit?Trade credit is an important feature of a business policy of a firm. Companies need ... Read More

A business firm may choose to go with long-term, short-term, or a mix of the two to finance its operations.Depending on the mix of short- and long-term approaches, three types of working capital policies may be found which are as follows −Matching ApproachWhen the expected life of assets is matched ... Read More

Businesses often need to decide whether they will go for short or long-term financing for running their businesses. The main aim of an organization is to offer maximum wealth to shareholders which is possible when a firm generates enough profits. However, the organizations must also keep an eye on the ... Read More