Taylor and Swanson currently sells on a cash basis only. The ﬁrm is considering switching to a 30-
day credit policy. When analyzing the cost beneﬁt of this switching policy, the ﬁrm should consider
the rate of default.

Question

Quizplus · Accepted Answer

The rate of default is an important factor to consider when switching to a credit policy, as it can significantly impact the cost-benefit analysis. If the default rate is high, the cost of financing bad debts may outweigh the benefits of increased sales. Therefore, it is important to consider this factor when making the decision.

Taylor and Swanson Currently Sells on a Cash Basis Only