a) Explain the significance of financing with accounts payable. b) Explain (including computations) the rationale of taking a cash discount, such as 2/15, n/40. c) Additionally, determine the approximate balance of accounts payable, if a company stretches its payables to 60 days and on average, they make purchases of $1,000,000 per day from their vendors. d) Explain what the stretching accomplishes if the vendors should be paid in 40 days
a) Explain the significance of financing with accounts payable. b) Explain (including computations) the rationale of taking a cash discount, such as 2/15, n/40. c) Additionally, determine the approximate balance of accounts payable, if a company stretches its payables to 60 days and on average, they make purchases of $1,000,000 per day from their vendors. d) Explain what the stretching accomplishes if the vendors should be paid in 40 days
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter21: Supply Chains And Working Capital Management
Section: Chapter Questions
Problem 15P: Suppose a firm makes purchases of $3.65 million per year under terms of 2/10, net 30, and takes...
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a) Explain the significance of financing with accounts payable.
b) Explain (including computations) the rationale of taking a cash discount, such as 2/15, n/40.
c) Additionally, determine the approximate balance of accounts payable, if a company stretches its payables to 60 days and on average, they make purchases of $1,000,000 per day from their vendors.
d) Explain what the stretching accomplishes if the vendors should be paid in 40 days.
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