 |  Fundamentals of Corporate Finance, 4/e Stephen A. Ross,
Massachusetts Institute of Technology
Randolph W. Westerfield,
University of Southern California
Bradford D. Jordan,
University of Kentucky
Gordon S. Roberts,
York University
Credit and Inventory Management
Learning ObjectivesAfter studying this chapter in the textbook, you should be able to:
| List the components of a credit policy. |
| | | | Determine a firm's investment in receivables from information about average daily sales and average collection period. |
| | | | Compute the EAR and APR implied by a particular set of trade credit terms. |
| | | | Compute the NPV of switching trade credit terms offered by a firm. |
| | | | Calculate the increase in sales required to break-even on a decision to change trade credit terms offered by a firm. |
| | | | Determine when credit should be granted based on a onetime sale and on repeat business. |
| | | | List and discuss the five Cs of credit evaluation. |
| | | | Be familiar with the application of multiple discriminant analysis to the decision of granting credit. |
| | | | Outline the key costs of holding inventory. |
| | | | Calculate the basic economic order quantity (EOQ). |
| | | | Calculate the EOQ allowing for safety stocks and time for delivery. |
| | | | Discuss the concept of materials resource planning (MRP) and its importance in the method of just-in-time (JIT) inventory management. |
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2002 McGraw-Hill Higher Education