Effective credit management involves establishing credit standards for extending credit to customers, determining the companys 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.

A companys to the conditions of the credit sale, including cash discounts and due dates.

Consider the case of the Jamison Company:

The financial managers at the Jamison Company have been monitoring the companys receivables and have compiled the following information:

	All sales are on credit. Jamisons current terms are 2/10 net 30.
	15% of Jamisons customers take advantage of the discount.
	Payments from its remaining customers are received, on average, in 54 days.
	Estimated credit sales are $160.000 million annually.
	Variable costs are 82% of gross sales.
	Credit evaluation and collection costs are 10% of gross sales.
	There are no bad debts to consider in this analysis.

Using the preceding information, fill in the blanks in the following analysis:

Credit Analysis
I. General Credit Policy Information
Credit terms	2/10 net 30
Days sales outstanding (DSO) for all customers
DSO for customers who take the discount (15%)	10 days
DSO for customers who forgo the discount (85%)	54 days
II. Annual Credit Sales and Costs ($ millions)
Gross sales	$160.000
Net sales
Amount paid by discount customers
Amount paid by nondiscount customers	$136.000
Variable operating costs (82% of gross sales)	$131.20
Bad debts	$0.0
Credit evaluation and collection costs (10% of gross sales)	$16.00