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The role of CFO at Mt. Sterling Drug Company, a dynamic pharmaceutical wholesaler. The market is becoming fiercely competitive, with rivals extending various incentives, including

The role of CFO at Mt. Sterling Drug Company, a dynamic pharmaceutical wholesaler. The market is becoming fiercely competitive, with rivals extending various incentives, including credit terms that allow a 1 to 2% discount for prompt payment within a 10-day window.

  1. Craft a thorough financial analysis: If you were to introduce a credit system, what would be the potential financial implications, both immediate and long-term, considering bad debts and the time value of money?
  2. Drawing from your studies or real-world cases, can you identify any innovative strategies or hybrid models that strike a balance between maintaining cash flow and staying competitive in such market dynamics?
  3. As CFO, how would you communicate and justify your decision, grounded in accounting principles and financial strategy, to the board of directors and stakeholders? Please provide references.

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