ullumber Corp. sells its goods with terms of 3/10 EOM, net 45. What is the implicit cost of the trade credit? (Do not round itermediate calculations. Use 365 days for calculation. Round answer to 2 decimal places, e.g. 12.25%.) The implicit cost of the trade credit is

ullumber Corp. sells its goods with terms of 3/10 EOM, net 45. What is the implicit cost of the trade credit? (Do not round itermediate calculations. Use 365 days for calculation. Round answer to 2 decimal places, e.g. 12.25%.) The implicit cost of the trade credit is

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter16: Supply Chains And Working Capital Management

Section: Chapter Questions

Problem 8P

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Cullumber Corp. sells its goods with terms of 3/10 EOM, net 45. What is the implicit cost of the trade credit? (Do not round itermediate calculations. Use 365 days for calculation. Round answer to 2 decimal places, e.g. 12.25%.)

The implicit cost of the trade credit is

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Hillz sells its goods with terms of 1/16 EOM, net 30. What is the implicit cost of the trade credit? (Do not round intermediate calculations. Use 365 days for calculation. Round answer to 2 decimal places, e.g. 12.25%.)
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Why is some trade credit called free while other credit is called costly? If a firm buys on terms of2/10, net 30, pays at the end of the 30th day, and typically shows $300,000 of accounts payableon its balance sheet, would the entire $300,000 be free credit, would it be costly credit, or wouldsome be free and some costly? Explain your answer. No calculations are necessary.
Fill in the blank with the correct answer
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Assume the credit terms offered to your firm by your suppliers are 4/15, net 30. Calculate the cost of the trade credit if your firm does not take the discount and pays on day 30
Cost of trade credit Firms usually offer their customers some form of trade credit. This allowance comes with certain terms of credit. These terms will affect the cost of the asset for both the buyer and the seller. Consider the following case: Blue Elk Manufacturing buys most of its raw materials from a single supplier. This supplier sells to Blue Elk on terms of 2/15, net 45. The cost per period of the trade credit extended to Blue Elk, rounded to two decimal places, is___________% Blue Elk’s trade credit has a nominal annual cost—expressed as an annual percentage rate (APR)—of_________%, assuming a 365-day year. (Note: Round all intermediate calculations to four decimal places, and your final answer to two decimal places.) If Blue Elk’s supplier shortens the discount period by five days, this will _____________(Increase or decrease pick one) the cost of the trade credit.
McEwan Industries sells on terms of 3/10, net 40. Total sales for the year are $1,912,500; 40% of the customers pay on the 10th day and take discounts, while the other 60% pay, on average, 66 days after their purchases. Assume 365 days in year for your calculations. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. a. What is the days sales outstanding? Round your answer to two decimal places. 43.6 $ b. What is the average amount of receivables? Round your answer to the nearest cent. Do not round intermediate calculations. days 228,452 c. What is the percentage cost of trade credit to customers who take the discount? Round your answers to two decimal places. 3.09 %
8. Cost of trade credit Firms usually offer their customers some form of trade credit. This allowance comes with certain terms of credit, which affect the cost of asset of sale for the buyer as well as the seller. Consider this case: Green Moose Industries buys most of its raw materials from a single supplier. This supplier sells to Green Moose on terms of 4/15, net 30. The cost per period of the trade credit extended to Green Moose, rounded to two decimal places, is 4.17% Green Moose's trade credit has a nominal annual cost of decimal places, and your final answer to two decimal places.) The effective annual rate (EAR) of the supplier's trade credit is , assuming a 365-day year. (Note: Round all intermediate calculations to four If Green Moose Industries's supplier shortens its discount period to five days, this will increase the cost of the trade credit.
Wentz Co. made it a priority to negotiate better credit terms with its suppliers so it could defer payments longer. (a) Use the following information for Wentz Co. to compute days’ payable outstanding for Year 1 and Year 2. (b) Does Wentz Co. appear to have negotiated better credit terms in Year 2 than in Year 1?
I only need the 2b question. Thanks!
Give true calculation