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Q-3: Working capital is a critical element in every type of business decision. Finance professionals try their best to manage every component of working capital;
Q-3: "Working capital is a critical element in every type of business decision. Finance professionals try their best to manage every component of working capital; be it cash, accounts receivables, inventory, and accounts payables. In this process, credit policy and collection policy play an important role. After all, the goal of the firm is to ensure the smooth functioning of the business and shareholders' wealth maximization, (a) In view of the above statement, what important quantitative measures can be used to evaluate the collection policy of the firm? (1 Mark) (b) Write down the 5 C's of credit that are generally used by the lending institutions and the suppliers to check the credit health of the company (1 Mark)
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