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Articles on Trending Technologies
Technical articles with clear explanations and examples
What are the Types of Credit Policy Variables?
What are Credit Policy Variables?Credit policy variables are an essential feature of every credit policy. These variables impact the credit policy directly or indirectly. Since the variables have the power to make or break a credit policy they are considered indispensable while forming and executing the credit policy. Management of credit policies requires efficient handling of credit policy variables.The four types of credit policy variables are as follows −Credit StandardsStandards of Credit Policy refer to the offering of credit to particular customers and it is purely institutional in character. A company may decide to grant credit to a company willingly ...
Read MoreWhat are the Three Components of Credit Policy?
Credit Policy: DefinitionCredit policy is mainly dependent on the volume of credit sales and the collection period. The volume of credit policy is a function of a company’s gross sales and the percentage of credit sales to total sales. Total sales of a company depend on many factors, such as market size, market share, quality of products, competition, etc.Companies may sell their products in credit for various reasons, such as gaining more market share and being competitive in the industry. Credit sales create trade debtors or accounts receivables where the seller needs to wait for a certain period for the ...
Read MoreDifference between Converter and Inverter
Converter and inverter are both two important power-electronic devices in the field of electrical and electronics engineering. Inverters and converters are used for the conversion of AC power into DC power and vice-versa which is a very important phenomenon in the field power electronic engineering as well as in our day-to-day life.The most significant difference between these two devices is that a converter is a power-electronic device which can transform the electric power from one form (AC or DC) to another form (AC or DC), while an inverter is a type of power electronic converter which converters DC power into ...
Read MoreDifference between Centre-Tapped Rectifier and Bridge Rectifier
The electronic circuit which is used to convert alternating current (AC) into direct current (DC) is known as a rectifier. The process of converting the alternating current into direct current is called rectification. The main component of the rectifier which performs the rectification is the semiconductor diode.Depending upon the type of conversion from AC to DC, i.e. half cycle of AC or full cycle of AC, rectifiers can be grouped into two categories −Half-wave rectifierFull-wave rectifierBased on the circuit configuration, the full-wave rectifier is further classified into two types viz. −Centre-tapped full-wave rectifierBridge rectifierThus, both centre-tapped and bridge rectifiers are ...
Read MoreDifference between Apparent Power and Real Power
In an electric circuit, the rate at which the work is being done (or the energy is being expended) is known as electric power. Mathematically, electric power can be defined as the work done (or energy expended) per unit time, i.e., $$\mathrm{Power, \mathit{P}\:=\:\frac{Work\:done\:(\mathit{W})}{Time(\mathit{t})}}$$The unit of electric power is Joules per second.Based on the type of current, the electric power can be of two types viz.: DC power and AC power. The AC power is further classified into three main types as −Apparent power (S)Active power (P)Reactive power (Q)In this article, we will discuss about what the apparent power and the ...
Read MoreDifference between Ammeter and Galvanometer
Ammeter and galvanometer are both measuring instruments used to measure the current flowing through a circuit. The most significant difference between a galvanometer and an ammeter is that the ammeter measures only the magnitude of the current flowing in the circuit, while the galvanometer shows both magnitude and direction of the current in the circuit.Go through this article to know more about ammeter and galvanometer and the key differences between these two measuring instruments.What is a Galvanometer?A galvanometer is an electromechanical measuring device used to measure the strength of current and direction in an electric circuit. A typical galvanometer consists ...
Read MoreWhat is the Difference between Liquidity and Profitability?
LiquidityThe liquidity and profitability of a company are directly related to the working capital. When a company maintains high temporary working capital in current assets, it is known to be more liquid. The companies that maintain a lower level of working capital are known as less liquid.Companies that maintain higher liquidity and considered to be at lower risk. They are able to meet the needs of the company and their reservoir of current assets lets them have the freedom to stay solvent.However, more liquid companies have lower profitability because their funds are tied up in operations and these funds cannot ...
Read MoreWhat is a Credit Policy?
The credit policy is an important tool to improve the selling efforts of a company. However, before discussing about credit policy, it is important to first understand about trade credit and its characteristics.What is Trade Credit?Trade credit is an important feature of a business policy of a firm. Companies need to sell their products or services the value of which will be paid in the future to make their offers to sellers more competitive. Trade credit is also a way manufacturers adopt to make the product offer more attractive to the point of sale sellers.Trade credit creates trade debtors or ...
Read MoreWhat are the 3 Working Capital Financing Policies?
A business firm may choose to go with long-term, short-term, or a mix of the two to finance its operations.Depending on the mix of short- and long-term approaches, three types of working capital policies may be found which are as follows −Matching ApproachWhen the expected life of assets is matched with the expected life of the source of funds, the approach is known as the matching approach. In this approach, short-term financing is used for short-term assets while long-term financing is used for long-term assets.The justification for such an approach is that since financing is meant for paying the assets, ...
Read MoreTrade-off between Long-term and Short-term Financing
Businesses often need to decide whether they will go for short or long-term financing for running their businesses. The main aim of an organization is to offer maximum wealth to shareholders which is possible when a firm generates enough profits. However, the organizations must also keep an eye on the interest rates because the rates may sometimes be palpable to eat a significant chunk of earnings.It has been generally observed that short-term financing is preferable to long-term funding. Short-term financing has the benefits of cost and flexibility that make it more attractive than long-term financing.Following points will help you understand ...
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