A firm that chooses a low-risk, restrictive credit policy will tend to have a larger investment in receivables.

Question

Quizplus · Accepted Answer

A low-risk, restrictive credit policy typically results in a firm being more selective about to whom it extends credit, leading to fewer customers being granted credit. This approach generally results in a smaller investment in receivables, as the firm aims to minimize the risk of non-payment.

A Firm That Chooses a Low-Risk, Restrictive Credit Policy Will