TAILIEUCHUNG - Lecture Managerial finance - Chapter 27: Providing and obtaining credit

Chapter 27 provides knowledge of providing and obtaining credit. This topic will describe: Receivables management: Credit policy, days sales outstanding (DSO), aging schedules, payments pattern approach; cost of bank loans. | Chapter 27 Providing and Obtaining Credit Topics in Chapter Receivables management Credit policy Days sales outstanding (DSO) Aging schedules Payments pattern approach Cost of bank loans Elements of Credit Policy Cash Discounts: Lowers price. Attracts new customers and reduces DSO. Credit Period: How long to pay? Shorter period reduces DSO and average A/R, but it may discourage sales. (More ) Credit Policy (Continued) Credit Standards: Tighter standards reduce bad debt losses, but may reduce sales. Fewer bad debts reduces DSO. Collection Policy: Tougher policy will reduce DSO, but may damage customer relationships. What are some factors which influence the dollar cost of carrying receivables? The lower the profit margin, the higher the cost of carrying receivables, because a greater portion of each sales dollar must be financed. The higher the cost of financing, the higher the dollar cost. What four variables make up a firm’s credit policy? Cash discounts Credit period Credit standards Collection policy Disregard any previous assumptions Current credit policy: Credit terms = Net 30. Gross sales = $1,000,000. 80% (of paying customers) pay on Day 30. 20% pay on Day 40. Bad debt losses = 2% of gross sales. Operating cost ratio = 75%. Cost of carrying receivables = 12%. The firm is considering a change in credit policy New credit policy: Credit terms = 2/10, net 20. Gross sales = $1,100,000. 60% (of paying customers) pay on Day 10. 30% pay on Day 20. 10% pay on Day 30. Bad debt losses = 1% of gross sales.

• Tài chính doanh nghiệp
• Managerial finance
• Lecture Managerial finance
• Financial statements
• Obtaining credit
• Providing credit
• Credit policy
• Principles of managerial finance
• Lecture Principles of managerial finance
• Environment of managerial finance
• Financial services
• Career opportunities
• Financial analysis
• Cash flow
• Financial planning
• Time value of money
• Future calue
• Risk and Return Fundamentals
• Interest rates
• Bond valuation
• Stock valuation
• Equity capital
• International managerial finance
• Capital budgeting cash flow
• Incremental cash flows
• Capital budgeting techniques
• Net present value
• The cost of capital
• Cost of long term debt
• Marginal cost
• Breakeven analysis
• Capital structure
• Operating breakeven point
• Working capital
• Current asset management
• Spontaneous liabilities
• Accounts payable management
• Short term loans
• Financial options
• Corporate finance
• Option terminology
• Dividend policy
• The financial market environment
• Corporate governance
• Managerial behavior
• Stock options
• Capital budgeting cash flows
• Payout policy
• Current liabilities management
• Business organization
• Maximize wealth
• Financial securities
• Free cash flows
• Future value
• Present value
• Rates of return
• Balance sheet
• Personal taxes