Question

optimum credit exists when
the average rate of return is more than the required rate of return
the average rate of return is less than the required rate of return
the average rate of return is equal to the required rare of return

Answer 1

▪︎the average rate of return is less than the required rate of return

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Answer 2

OPTIMUM CREDIT

Optimum credit exists when the average rate of return is more than the required rate of return.

KEY TAKEWAYS FOR CREDIT POLICY :

* A credit policy outlines the amount of credit given to consumers as well as how late bills will be collected. The policy is an important part of a company's finances since it affects the amount of working capital needed to sustain accounts receivables, as well as the amount of bad debt losses.

* The loan policy is changed to reflect changes in economic conditions as well as the company's strategy. Thus, a plan to rapidly expand sales would necessitate a change in credit policy to provide clients more credit, but a fall in economic circumstances might necessitate a limitation in credit policy to avoid a rise in bad debt.