Illustration: A company sells $50,000 of goods with the terms net/30. The receivable is immediately factored with a 3% factor fee, 10% interest, and a reserve of 8%. How much does the selling firm immediately receive from the factor?

Q: Mahrouq Technologies buys $12,726,823 of materials (net of discounts) on terms of 1/30, net 60, and…

A: Normal cost of trade credit can be calculated by using this equation Normal cost of trade credit…

Q: Cook Security Systems has a $37,500 line of credit, which charges an annual percentage rate of prime…

A: Interest rate= Prime rate +4% = 8% + 4%= 12% Interest is calculated for the number of days on…

Q: A new supplier has offered your firm the credit terms 2/10, Net 30 on a $1,000,000 order. Late…

A: Suppliers usually offer credit terms to the buyers which aim to incentivize the buyer for making…

Q: You are presented with the following information extracted from your organisation’s financial…

A: Projected cash flows are as follows: Resultant table:

Q: Cook Security Systems has a $37,500 line of credit, which charges an annual percentage rate of prime…

A: Prime rate The current interest rate charged by the financial institution to its customers is known…

Q: ou prefer to extend credit on the assumption that you will be paid in full within 42 days of the…

A: Solution:- As given in the question, Firm X has an average inventory of $640,000 and sales of…

Q: Cook Security Systems has a $37,500 line of credit, which charges an annual percentage rate of prime…

A: the line of credit is a pre-approved limit offered by financial institutions, banks, etc, you can…

Q: 3) A large retailer obtains merchandise under the credit terms of 3/10, net 30, but routinely takes…

A: Discount Rate = 3% Discount Period = 10 days Credit Period = 50 days

Q: Cook Security Systems has a $37,500 line of credit, which charges an annual percentage rate of prime…

A: Given, Cock security system has $37500 line of credit  Annual percentage rate  = 4% october pmt -…

Q: Cook Security Systems has a $37,500 line of credit, which charges an annual percentage rate of prime…

A: The current balance will be a function of opening balance, fresh borrowing, less repayment and the…

Q: calculate the present value of this cash outflow assuming trade credit terms of a) 30 days b) 45…

A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: Cook Security Systems has a $37,500 line of credit, which charges an annual percentage rate of prime…

A: New balance  = balance  on 31 October  + interest

Q: Bumpas Enterprises purchases $4,562,500 in goods per year from its sole supplier on terms of 5/10,…

A: Trade credit is a type of credit that is extended by a business to its customers. It allows…

Q: Cook Security Systems has a $37,500 line of credit, which charges an annual percentage rate of prime…

A: DatesNo. of…

Q: A wholesale company needs to borrow $600,000 to finance inventory for the upcoming seasonal rush.…

A: A borrower gets an interest quote for a borrowing, however it needs to maintain a compensating…

Q: Ex/ A company sells $10,000 in merchandise to a buyer on finance.Another financial institution has…

A: FV is the $10,000 in merchandise the company sold,r is the discount rate of 4% per year (0.04 as a…

Q: ook Security Systems has a $37,500 line of credit, which charges an annual percentage rate of prime…

A: DatesNo. of…

Conversion Cycle

Conversion cycle is also known as cash cycle or net operating cycle. Conversion cycle refers to how much time a company takes to turn its investments which is done from stock or any other financial resources into cash flows from sales.