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Current Asset Management (Assessing creditworthiness (Attitude, Credit…
Current Asset Management
Cost of Selling on Credit
Bad debts
Cost of financing debtors
Admin costs of managing debtors
Assessing creditworthiness
Attitude
Credit history
Financial position of debtor
Security provided
Environment/economic trends
Economic Order Quantity
Assumptions
Sales can be forecasted perfectly
Sales are evenly distributed throughout the year
Orders are received w no unexpected delays
Square root of (2)(FC)(Sales in units) / Carrying cost of one unit of inventory for one year
JIT
Reasons for cash on hand
Speculative
Transactions
Precautoinary
Loan covenant
Effective cost of trade creditor finance
formula
Impact of change in credit policy
G - I - B - D