Optimal Credit Policy

For business reports on credit visit

. www.creditworthy.com.

So far, we've discussed how to compute net present values for a switch in credit policy. We have not discussed the optimal amount of credit or the optimal credit policy. In principle, the optimal amount of credit is determined by the point at which the incremental cash flows from increased sales are exactly equal to the incremental costs of carrying the increase in investment in accounts receivable.

0 0

Post a comment