Ch $15$: Assignment $-$ Working Capital Management

$3.$ Accounts receivable

Efrective credit management invalves establishing credit standards for extending credit to customers, determining the company's credit terms, and setting up procedures for invoicing and collecting past$-$due accounts.

The following statement refers to a credit management policy, Select the best term to complate the sentence.

The minimum financial strength a customer must have to be granted credit is Indicated by the company's

Consider the case of Water and Power co$.$:

Water and Power Co$.$ has a very attractive credit policy, and none of its custemers pays in cash when the firm makes a sale. Water and Pawer Co$.$ sells to its customers on credit terms of $\frac{2}{10},$ net $30.$

If a custamer bought $$125,000$ worth of goods and paid the firm cash reght days after the sale, how much cash would W$/$ater and Power Co$.$ get from the customer?

$[$$$122,500],[$$$106,250],[$$$131,250],[$$$100,000]$

If the customer poid off the account after $15$ days, Water and Power Co$.$ would recaive

Approximately $25\%$ of Water and Power Co$.\text{'}$s custorners teke advantege of the discount and pay on the $10$ th day, The remaining $75\%$ take an average of $35$ days to pay off their accounts. What is Wate$-$ and Power Co$.\text{'}$s days sales outstanding $($DSO$),$ or the average collection period?

Water and Power Co$,$ has a very attroctlve credit policy, and none of its customers pays in cash when the firm makes a sale. Water snd Power Co$.$ sells to its customers on credit terms of $\frac{2}{10},$ net $30.$

If a customer bought $$125,000$ worth of goods and paid the firm cash eight days after the soln, how muci cash would wacer and pawer co$.$ get from the customer?

$\backslash$table$[[$$$122,500$