You've been hired to help grow a start-up. It reported sales of $ 2 million during the past fiscal quarter. It does not offer trade credit, as the majority of it's customer use credit card. In a bid to expand the business, you are asked to determine whether extending trade credit is a good idea. What factors are important for you in making this decision?

Required textbooks and readings

• Lundholm/Sloan, Equity Valuation and Analysis (with eVal), 3rd edition, Boston et al.: McGraw-Hill/Irwin 2012, ISBN: 978-0073526898. [LS]

• Penman, Financial Statement Analysis and Security Valuation, 5th edition, Columbus 2013 (relevant sections available on LSF)