Working Capital Management - Accounts Receivable and Credit Policy

6 important questions on Working Capital Management - Accounts Receivable and Credit Policy

What is the formula for the effective annual rate?

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On a $100 sale, with terms 5/10 net 60, what is the implied interest rate on the credit given?

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What is a credit analysis?

It seeks to judge whether customers are likely to pay their debts.
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What is a open account?

Agreement whereby sales are made with no formal debt contract

What is a credit policy?

The standards set to determine the amount and nature of credit to extend to customers.

What is an aging schedule?

Classification of accounts receivable by time outstanding

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