Ans1- Credit is the provision of resources such as granting a loan by one party to another party

where that second party does not reimburse the first party immediately, thereby generating a debt, and instead arranges either to repay or return those resources (or material(s) of equal value at a later date. It is any form of deferred payment. The first party is called a creditor, also known as a lender, while the second party is called a debtor, also known as a borrower. Movements of financial capital are normally dependent on either credit or equity transfers. Credit is in turn dependent on the reputation or creditworthiness of the entity which takes responsibility for the funds. Cash Discounts: Lowers price. Attracts new customers and reduces DSO. Credit Period: How long to pay? Shorter period reduces DSO and average A/R, but it may discourage sales. Credit Standards: Tighter standards tend to reduce sales, but reduce bad debt expense. Fewer bad debts reduces DSO. Collection Policy: How tough? Tougher policy will reduce DSO but may damage customer relationships

Ans2- Factoring or factorization--is the process through which mathematicians and others take a
number and break it into all of the whole numbers into which it can be divided, which are called "factors." It is a fundamental operation of algebra, trigonometry, and calculus, and most studentsbegin to learn it at the junior high level.

Types

The type of factorization illustrated above is only for single numbers. In cases where you are dealing with polynomials and quadratic equations in linear algebra and higher levels of math, you need to use more complicated methods to find the factors. For example, the factors of the expression x^2-10x-24 are (x+2)(x-12).

Benefits

Factorization generally allows you to break large composite numbers and complicated expressions into workable units that integrate neatly into other operations. These "workable units" are also known as divisors.

Ans3-(A) The ABC analysis is a business term used to define an inventory categorization
technique often used in materials management. It is also known as Selective Inventory Control. Policies based on ABC analysis:

A ITEMS: very tight control and accurate records

B ITEMS: less tightly controlled and good records C ITEMS: simplest controls possible and minimal records

The ABC analysis provides a mechanism for identifying items that will have a significant impact on overall inventory cost, while also providing a mechanism for identifying different categories of stock that will require different management and controls. The ABC analysis suggests that inventories of an organization are not of equal value. Thus, the inventory is grouped into three categories (A, B, and C) in order of their estimated importance. 'A' items are very important for an organization. Because of the high value of these A items, frequent value analysis is required. In addition to that, an organization needs to choose an appropriate order pattern (e.g. Just- in- time) to avoid excess capacity. 'B' items are important, but of course less important, than A items and more important than C items. Therefore B items are intergroup items. 'C' items are marginally important. Distribution of ABC class ABC class Number of items Total amount required 5 70 A 10 15 B C Total 85 100 15 100

(B)- Economic order quantity is the order quantity that minimizes total inventory holding costs
and ordering costs. It is one of the oldest classical production scheduling models. The framework used to determine this order quantity is also known as Barabas EOQ Model or Barabas Formula. The model was developed by Ford W. Harris in 1913, but R. H. Wilson, a consultant who applied it extensively, is given credit for his in-depth analysis.

Underlying assumptions The ordering cost is constant. The rate of demand is known, and spread evenly throughout the year. The lead time is fixed. The purchase price of the item is constant i.e. no discount is available The replenishment is made instantaneously, the whole batch is delivered at once. Only one product is involved. EOQ is the quantity to order, so that ordering cost + carrying cost finds its minimum. (A common misunderstanding is that the formula tries to find when these are equal

Variables-

= order quantity = optimal order quantity = annual demand quantity = fixed cost per order (not per unit, typically cost of ordering and shipping and handling. This is not the cost of goods) = annual holding cost per unit (also known as carrying cost or storage cost) (warehouse space, refrigeration, insurance, etc. usually not related to the unit cost)

Ans4-Consumers are the steam engine of the economy, if credit dries up; consumers have main
difficulties in borrowing. In different consume less because they have less entre to credit. For the reason that of this producers will sell less, and produce less. Fewer employees are needed so more will get laid off. Less working people + less output = lower GDP. This could create a unhelpful spiral. Most organizations have dedicated sales order, manufacturing, accounting and ordering system but very little around credit management attempting to implement a credit policy without systems to support it is a brave choice decision

Ans 5 Trade credit represents a substantial portion of short-term credit for most firms. A trade credit decision is usually limited to a comparison of the effective cost of trade credit with the annual cost of borrowing. If the cost of not taking the cash discount exceeds the firms borrowing cost, the decision is to take the cash discount. This article examines traditional trade credit analysis, and reveals its inconsistencies with shareholder wealth maximization. The cost of foregoing trade credit and the cost of changing suppliers offering different trade credit terms are modeled using a net present value (NPV) framework.
There are two type of sources for financing the working capital requirement .

a) Permanent / long term sources (i) Shares Capital In shares we includes a) equity shares b) Pref. Share capital (ii) Debenture

(iii) Public deposits (iv) Ploughing back of profit. Here I am giving little explanation of ploughing back of profit . It means save some profit from business and when need of working capital it uses this is called ploughing back of profit this is good long term source of working capital. (V) Loan from financial institution b) Temporary / Short term sources (i) Indigenous bankers are the short term source for financing the working capital . (ii) Trade credits Trade credit means getting of goods on credit . This is also a short term source of working capital. (iii) Instalment credit ( iv) Income received in advance (v) Advances received from customers (vi) Bank loan include cash credit and overdraft ( vii) commercial papers (viii) Purchasing and discounting of bills ( ix) Letter of credit