第二十九章 信用管理

McGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.29-0ChapterOutline29.1TermsoftheSale29.2TheDecisiontoGrantCredit:RiskandInformation29.3OptimalCreditPolicy29.4CreditAnalysis29.5CollectionPolicy29.6HowtoFinanceTradeCredit29.7Summary&ConclusionsMcGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.29-1Introduction•Afirm’screditpolicyiscomposedof:–Termsofthesale–Creditanalysis–Collectionpolicy•Thischapterdiscusseseachofthecomponentsofcreditpolicythatmakesupthedecisiontograntcredit.McGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.29-2TheCashFlowsofGrantingCreditCreditsaleismadeCustomermailscheckFirmdepositscheckBankcreditsfirm’saccountAccountsreceivableCashcollectionTimeMcGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.29-329.1TermsoftheSale•Thetermsofsaleofcomposedof–CreditPeriod–CashDiscounts–CreditInstrumentsMcGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.29-4CreditPeriod•Creditperiodsvaryacrossindustries.•Generallyafirmmustconsiderthreefactorsinsettingacreditperiod:–Theprobabilitythatthecustomerwillnotpay.–Thesizeoftheaccount.–Theextenttowhichgoodsareperishable.•LengtheningthecreditperiodgenerallyincreasessalesMcGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.29-5CashDiscounts•Oftenpartofthetermsofsale.•Tradeoffbetweenthesizeofthediscountandtheincreasedspeedandrateofcollectionofreceivables.•Anexamplewouldbe“3/10net30”–Thecustomercantakea3%discountifhepayswithin10days.–Inanyevent,hemustpaywithin30days.McGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.29-6TheInterestRateImplicitin3/10net30Afirmofferingcredittermsof3/10net30isessentiallyofferingtheircustomersa20-dayloan.Toseethis,considerafirmthatmakesa$1,000saleonday0Somecustomerswillpayonday10andtakethediscount.Othercustomerswillpayonday30andforgothediscount.01030$97001030$1,000McGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.29-701030+$970-$1,000Acustomerthatforgoesthe3%discounttopayonday30isborrowing$970for20daysandpaying$30interest:36520)1(000,1$970$r970$000,1$)1(36520r%35.747435.01970$000,1$20365rTheInterestRateImplicitin3/10net30McGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.29-8CreditInstruments•Mostcreditisofferedonopenaccount—theinvoiceistheonlycreditinstrument.•PromissorynotesareIOUsthataresignedafterthedeliveryofgoods•Commercialdraftscallforacustomertopayaspecificamountbyaspecificdate.Thedraftissenttothecustomer’sbank,whenthecustomersignsthedraft,thegoodsaresent.•Banker’sacceptancesallowabanktosubstituteitscreditworthinessforthecustomer,forafee.•Conditionalsalescontractsletthesellerretainlegalownershipofthegoodsuntilthecustomerhascompletedpayment.McGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.29-929.2TheDecisiontoGrantCredit:RiskandInformation•Considerafirmthatischoosingbetweentwoalternativecreditpolicies:–“InGodwetrust—everybodyelsepayscash.”–Offeringtheircustomerscredit.)(000CPQ•Theonlycashflowofthefirststrategyis•Theexpectedcashflowsofthecreditstrategyare:'0'0PQh01'0'0QCWeincurcostsupfront……andgetpaidin1periodbyh%ofourcustomers.McGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.29-1029.2TheDecisiontoGrantCredit:RiskandInformation)(000CPQNPVcash•TheNPVofthecashonlystrategyis)1('0'0'0'0BcreditrPQhQCNPV•TheNPVofthecreditstrategyisThedecisiontograntcreditdependsonfourfactors:1.Thedelayedrevenuesfromgrantingcredit,2.Theimmediatecostsofgrantingcredit,3.Theprobabilityofrepayment,h4.Thediscountrate,rB'0'0QP'0'0QCMcGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.29-11ExampleoftheDecisiontoGrantCredit•Afirmcurrentlysells1,000itemspermonthonacashbasisfor$500each.•Iftheyofferedtermsnet30,themarketingdepartmentbelievesthattheycouldsell1,300itemspermonth.•Thecollectionsdepartmentestimatesthat5%ofcreditcustomerswilldefault.•Thecostofcapitalis10%perannum.McGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.29-12ExampleoftheDecisiontoGrantCreditTheNPVofcashonly:000,100$)400$500($000,1NoCreditNet45Quantitysold1,0001,300Sellingprice$500$500Unitcost$400$425Probabilityofpayment100%95%Creditperiod(days)030Discountratep.a.10%TheNPVofNet30:58.181,60$)10.1(95.0500$300,1425$300,1365/30McGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.29-13ExampleoftheDecisiontoGrantCredit•Howhighmustthecreditpricebetomakeitworthwhileforthefirmtoextendcredit?TheNPVofNet30mustbeatleastasbigastheNPVofcashonly:365/30'0)10.1(95.0300,1425$300,1000,100$P95.0300,1)10.1()425$300,1000,100($'0365/30P50.532$95.0300,1)10.1()425$300,1000,100($365/30'0PMcGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.29-14TheValueofNewInformationaboutCreditRisk•Themostthatweshouldbewillingtopayfornewinformationaboutcreditriskisthepres