Question -
Q1) What are the key variables for evaluating credit policy changes, according to credit managers? Are managers able to estimate the values for this variables adequately? Compare and contrast the incremental profit and NPV approaches to evaluating credit policy decisions.
Q2) List the assumptions of the NPV model. Are these assumptions valid when a company is considering extending its credit period from 30 to 90 days, if all its competitors retain a 30-day credit period?
Q3) What are the two major shortcomings of DSO and accounts receivable turnover? Which of this also plagues the aging schedule?