1. we are asked that:

1. Is it always good policy to reduce the firm's bad debts by "getting rid of the deadbeats"?

2. What are the probable effects on sales and profits of each of the following credit policies?

a. A high percentage of bad-debt loss but normal receivable turnover and credit rejection rate.

b. A high percentage of past-due accounts and a low credit rejection rate.

c. A low percentage of past-due accounts but high credit rejection and receivable turnover rates.

d. A low percentage of past-due accounts and a low credit rejection rate but a high receivable turnover rate.

3. Is an increase in the collection period necessarily bad? Explain.

4. What are the various sources of information you might use to analyze a credit applicant?

5. What are the principal factors that can be varied in setting credit policy?

6. If credit standards for the quality of accounts accepted are changed, what things are affected?

7. Why is the saturation point reached in spending money on collections?

8. What is the purpose of establishing a line of credit for an account? What are the benefits of this arrangement?