Which of the following is not a constituents of the credit policy of a business firm?

Credit policy of a business firm comprises the guidelines and procedures that govern how a firm extends credit to customers and collects payments.

The three main constituents of credit policy are:

1. Credit Standards - These define the criteria for evaluating customers' creditworthiness and deciding who qualifies for credit. This includes minimum financial requirements, credit ratings, and risk assessment parameters.

2. Credit Terms - These specify the conditions under which credit is granted, such as credit period (e.g., 30 days, 60 days), cash discount offered (e.g., 2/10, net 30), and any other payment conditions.

3. Collection Policy - These are the procedures and actions taken to collect payments from customers when credit is extended. This includes follow-up methods, reminder systems, and steps taken for overdue accounts.

Collection Period is not a constituent of credit policy. It is a financial metric that measures the average time taken by a firm to collect payments from credit customers. It is calculated as:

Collection Period = $\frac{\text{Average Accounts Receivable}}{\text{Average Daily Credit Sales}}$

Collection period is an outcome or result of implementing the credit policy, not a component of the policy itself. It helps evaluate the effectiveness of the credit policy but is not something that forms part of the policy framework.