1. Explain the rational for each of the four variables that make up a firm's credit policy. How likely (and how quickly) are competitors to respond to a change in each variable, and is their response likely to be the same for a change toward tightness as one toward looseness?
2. What is Lifelines' current days sales outstanding (DSO) [also called average collection period (ACP)]? What would the expected DSO be if the credit policy change were made?