Question 1: Explain why the bad debt percentage or any other similar credit-control percentage is not the ultimate measure of success in the management of accounts receivable. What is the key consideration?
Question 2: What are three quantitative measures that can be applied to the collection policy of the firm?
Question 3: What does the EOQ formula tell us? What assumption is made about the usage rate for inventory?
Question 4: A borrower is often confronted with a stated interest rate and an effective interest rate. What is the difference, and which one should the financial manager recognize as the true cost of borrowing?
Question 5: What is the difference between pledging accounts receivable and factoring accounts receivable?
Question 6: What is meant by hedging in the financial futures market to offset interest rate risks?