The optimal credit policy:A) Is the one which minimizes the accounts receivable period.B) Is an all-cash policy.C) Is difficult to precisely determine.D) Ignores opportunity costs.E) Minimizes the carrying costs.

Question

The optimal credit policy:A)  Is the one which minimizes the accounts receivable period.B)  Is an all-cash policy.C)  Is difficult to precisely determine.D)  Ignores opportunity costs.E)  Minimizes the carrying costs.

Jasleen Bharaj · Accepted Answer

Final Answer : C, Explanation :  The optimal credit policy is difficult to precisely determine because it involves balancing the benefits of increased sales against the costs of extending credit, including the risk of default and the costs of managing accounts receivable. It is not solely about minimizing accounts receivable period, minimizing carrying costs, ignoring opportunity costs, or adopting an all-cash policy, as these approaches could overlook the complexity of credit management and its impact on sales and profitability.

The optimal credit policy:

A) Is the one which minimizes the accounts receivable period.
B) Is an all-cash policy.
C) Is difficult to precisely determine.
D) Ignores opportunity costs.
E) Minimizes the carrying costs.

Definitions

Learning Objectives

Learning Objectives

Related questions