Summarize the lecture of account receivable and inventory?

Account receivable: -
Amount of money owned to a firm by the customers who have bought
goods or service on credit. A current asset the account receivable is also
called as receivables. Account receivables includes a tradeoff between
risk and profitability.

1. Credit standard is the minimum quality of credit worthiness of a credit

applicant that is acceptable to the firm. Lowering credit standards may
stimulate demand which results in higher sales and profit. Credit policy
has a significant impact on sales
2. Credit period is the length of time over which credit is extended to the
customer and the discount given for early payments.
3. In evaluating a credit applicant, the credit applicant, the credit analyst (1)
Obtain information on the applicant (2) analyze the information to
determine the applicants credit worthiness (3) makes the credit decisions.
4. The period of time during which cash discount is taken for early
payments is known as cash discount periods. A percent reduction in
purchase or sale price allowed for early payment of invoices. It is an
incentive for credit customers to pay invoices in a timely fashion is
known as cash discount. Varying cash discount involves an attempt to
speed up the payment of receivables.
5. Seasonal dating is credit terms that encourages the buyer of seasonal
products to take delivery before the peak sales period and to defer
payment until after the peak sales period. It can also be used to avoid
inventory carrying cost. If sales are seasonal and production is steady
throughout the year there will be buildups in finished goods inventory
during certain times of year.
6. The firm determines its overall collection policy by the combination of
collection procedures it take. The procedures include such things such as
letter, faxes, phone calls, personal visit and legal action. One of the
principal policy variables is amount of money spent on collection
procedures.
7. Source of information A credit analyst may use one or more of the
following sources of information