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Effective credit management involves establishing credit standards for extending credit to customers, determining the company's terms of credit, and setting up procedures for invoicing and
Effective credit management involves establishing credit standards for extending credit to customers, determining the company's terms of credit, 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 complete the sentence. How a company handles its credit accounts, including methods of invoicing and collecting past-due accounts, is indicated by the company's Consider the case of Stowe-Arts Holdings Co.: Stowe-Arts Holdings Co. has a very attractive credit policy, and none of its customers pays in cash when the firm makes a sale. Stowe-Arts Holdings Co. sells to its customers on credit terms of 1/10, net 30. If a customer bought $150,000 worth of goods and paid the firm cash eight days after the sale, how much cash would Stowe-Arts Holdings Co. get from the customer? $138,750 $131,250 $148,500 $157,500 If the customer paid off the account after 15 days, Stowe-Arts Holdings Co. would receive Approximately 20% of Stowe-Arts Holdings Co.'s customers take advantage of the discount and pay on the 10th day. The remaining 80% take an average of 35 days to pay off their accounts. What is Stowe-Arts Holdings Co.'s days sales outstanding (DSO), or the average collection period? 34.5 days 27.0 days 30.0 days 28.5 days
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