The following statements with regards to credit decisions and trade-offs are given.
(a) Price elasticity measures the responsiveness of the demand for a product to a change in price.
(b) The granting of credit can be thought of as a trade-off between holding cash and holding accounts receivable.
(c) When an increase in sales occurs because of increased credit terms, the gains in sales revenue will be offset by increased inventory holding costs, increased creditors, increase in cost of financing debtors and incurrence of bad debts.
(d) Companies targets sales as a method to increase profitability. When sales increase and paid for by customers in cash, the company will benefit by having an increase in profits.
(e) Granting of credit to customers can be seen as a trade-off between holding inventory and holding accounts receivable.
Which of the above statements are TRUE?
a.
Options (a), (b) and (c)
b.
Options (a), (c) and (e)
c.
Options (a), (b), (c), (d) and (e)
d.
Options (b), (c), (d) and (e)