1. Describe the three steps involved in evaluating credit applicants.

2. What are the primary sources of information about the creditworthiness of credit applicants?

3. Describe the five Cs of credit used in evaluating the creditworthiness of a credit applicant.

4. How does a firm's required rate of return on investment enter into the analysis of changes in its credit and collection policies?

5. A firm is currently selling on credit terms of "net 30," and its accounts receivable average 30 days past due (i.e., the firm's average collection period is 60 days). What credit policy variables might the firm consider changing to reduce its average collection period?

6. "The objective of the firm's credit and collection policies should be to minimize its bad-debt losses." Do you agree or disagree with this statement? Explain.