The point at which the incremental cost of investing in accounts receivables is just offset by the cash inﬂows created by the incremental sales is the point at which the ﬁrm has achieved the
Optimal:

Question

Quizplus · Accepted Answer

The point at which the incremental cost of investing in accounts receivables is just offset by the cash inflows created by the incremental sales is directly related to the credit policy of the firm. An optimal credit policy strikes a balance between the cost of carrying accounts receivables and the benefit of increased sales revenue. Therefore, the achievement of this balance is the point at which the firm has achieved the optimal credit policy.

The Point at Which the Incremental Cost of Investing in Accounts