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| An Analysis on Credit Sale Ratio in a Supply Chain |
| CHENG Hong WANG Xian-yu |
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Abstract The trade credit brings profits to the supplier, however, certain risks transforming to supplier unconsciously. Credit sale brings profits to the supplier. At the same time, however, certain risks would be transferred to suppliers. Some scholars have already studied risk control based on symmetric information. But in this article, the risk with asymmetric information will be examined. Combined with the motivation theory and corporate finance theory, we examine the optimal ratio of credit sale and the influence of some factors (such as goodwill) on this ratio. In addition, the ratio in the case of the commodities residual value is discussed. Finally, some strategies about credit sale for suppliers and retailers are provided.
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Received: 18 February 2009
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Corresponding Authors:
CHENG Hong
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2009, Vol. 1 
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