A ﬁrm currently has a cash only credit policy. The ﬁrm is considering adopting a credit policy which
will extend credit to customers for 45 days and grant the credit customers who pay in 15 days or
less a discount.
The default rate and increase in sales are variables used in the analysis of this proposal that are
outside of the control of the ﬁrm.

Question

Quizplus · Accepted Answer

The default rate and increase in sales are external factors that are not under the control of the firm, and are therefore considered as variables in the analysis of the credit policy proposal.

A ﬁRm Currently Has a Cash Only Credit Policy