Credit policy
Credit standards. The financial strength and creditworthiness that qualifies a customer for a firm's regular credit terms.
- Credit terms. Statements of the credit period and any discounts offered—for example, 2/10, net 30.
- Cross rate. The exchange rate between two non-U.S. currencies.
- Crossover rate. The cost of capital at which the NPV profiles for two projects intersect.
- Cumulative preferred dividends. A protective feature on preferred stock that requires all past preferred dividends to be paid before any common dividends can be paid.
- Currency appreciation. Occurs when a particular currency is worth more than it previously was.
- Currency depreciation. Occurs when a particular currency is worth less than it previously was.
- Current yield (current yield on a bond). The annual coupon payment divided by the current market price.
Credit policy is the firm's policy on granting and collecting credit. There are four elements of credit policy, or credit policy variables: credit period, credit standards, collection policy, and discounts.
Definitions
According to Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition),
- Credit policy. The firm's policy on granting and collecting credit. There are four elements of credit policy, or credit policy variables: credit period, credit standards, collection policy, and discounts.
Related concepts
- Financial management. A combination of enterprise efforts undertaken in order to procure and utilize monetary resources of the enterprise.
