Trade credit is a contract between one business and another that allows one party to purchase goods without payment in cash for a short time like 30 days for example. This is very common in pharmaceutical industries where the medical supplies are purchased on credit and the payments are accrued for short time(less than one year).
Trade credit allows the buyer some time to organize cash for payment of supplies purchased. The credit terms for fast manufacturing goods or FMCG are shorter whereas longer trade credit periods are allowed in the construction industry. The sellers normally allow a trade discount to buyers for early payment within a prescribed time period, normally 10 to 15 days after purchase.
Calculate the nominal annual cost of nonfree trade credit under each of
Dan Barnes, financial manager of Ski Equipment Inc. (SKI
The Hand-to-Mouth Company needs a $10,
Grunewald Industries sells on terms of 2/10, net 40
Suppose a firm makes purchases of $3.65 million per
Why some trade credit is called free while other credit is called
When the Beacon Computer Company filed for bankruptcy under Chapter 7 of
Your supplier offers terms of 1/10, net 45.
Assume the credit terms offered to your firm by your suppliers are
McDowell Industries sells on terms of 3/10, net 30
