Effective credit management involves establishing credit standards for extending credit to customers, determining the company’s credit terms, and setting up procedures for invoicing and collecting...

The minimum financial strength a customer must have to be granted credit is indicated by the company’s    .

Universal Exports Inc. has a very attractive credit policy, and none of its customers pays in cash when the firm makes a sale. Universal Exports Inc. sells to its customers on credit terms of 1/10, net 30.

If a customer bought $150,000 worth of goods and paid the firm cash eight days after the sale, how much cash would Universal Exports Inc. get from the customer?

If the customer paid off the account after 15 days, Universal Exports Inc. would receive ($150,000/ $120,000/ $127,500/157,500) .

Approximately 30% of Universal Exports Inc.’s customers take advantage of the discount and pay on the 10th day. The remaining 70% take an average of 35 days to pay off their accounts. What is Universal Exports Inc.’s days sales outstanding (DSO), or the average collection period?