Trade Credit is a ___________ tool. a) disbursement b) lockbox c) sales
Trade Credit is a ___________ tool.
a) disbursement
b) lockbox
c) sales
Homework Answers
Trade Credit. For many businesses, trade credit is an essential tool for financing growth. Trade credit is the credit extended to you by suppliers who let you buy now and pay later.
Hence it is a sales tool
Add Answer to:
Trade Credit is a ___________ tool.
a) disbursement
b) lockbox
c) sales
8. A lockbox system: a) entails the use of a bank which is centrally located to...
8. A lockbox system: a) entails the use of a bank which is centrally located to collect payments on a nationwide basis. b) is designed to deposit a customer's check into the firm's bank account prior to recording the receipt of that check to a customer's account. c) is used to reduce the disbursement float of a firm. d) automatically records payments to a customer's account when the customer's check is received at the lockbox location. PLEASE HELP
A lockbox arrangement is: Answers: A. a method for the safe-keeping of marketable securities. B. used...
A lockbox arrangement is: Answers: A. a method for the safe-keeping of marketable securities. B. used to identify inventory safety stocks. C. a system for slowing down cash disbursements. D. a system for speeding up a firm's collections of checks received. E. a system for speeding up a firm's disbursement of checks to the customers. Question 18 A change in the credit policy will be beneficial to a firm if it results in an increase in the: Selected Answer: C....
Eagle Industries feels that a lockbox system can shorten its accounts receivable collection period by 2...
Eagle Industries feels that a lockbox system can shorten its accounts receivable collection period by 2 days. Credit sales are $3,500,000 per year, billed on a continuous basis. The firm has other equally risky investments with a return of 12%. The cost of the lockbox system is $10,000 per year. (Note: Assume a 365-day year.) a. What amount of cash will be made available for other uses under the lockbox system? b. What net benefit (cost) will the firm realize...
The financial analyst at Medupe Company has prepared the following sales and cash disbursement estimates (in...
The financial analyst at Medupe Company has prepared the following sales and cash disbursement estimates (in thousand rand) for the period February to June of the current year February March April May June Sale 5000 6000 4000 2000 2000 Cash disbursement 4000 4000 6000 5000 3000 Historically Medupe Company has had 30% of sales being for cash. Of the credit sales, 70% are collected one month after the sale, and the remaining 30% are collected two months after the sale....
7. Box Lock has annual sales of $4 million and is considering implementing a lockbox system,...
7. Box Lock has annual sales of $4 million and is considering implementing a lockbox system, which would reduce customer collection float by four days. Box Lock has a cost of capital of 13 percent. The annual after-tax cost of the lockbox system is $2000. Assume a 365-day year, should Box Lock implement the system? What would be the benefit, in dollar amount, if it did? 8. Geo-M is considering adding a cash discount to its credit terms. If Geo-M...
whenever possible? a. Requisition, control, and disbursement of inventory b. Requisition of inventory and conversion of...
whenever possible? a. Requisition, control, and disbursement of inventory b. Requisition of inventory and conversion of inventory to ser c. Requisition, receipt, and control of inventory d. All of the above 6. Which of the following is a tool used in an analytical review of inventory to see if inventory is being stolen? a. Subtracting Cost Of Goods Sold from Net Sales, dividing the result by Net Sales, then comparing the result to the ratio for prior years b) Dividing...
Cost of Trade Credit What are the nominal and effective costs of trade credit under the...
Cost of Trade Credit What are the nominal and effective costs of trade credit under the credit terms of 1/20, net 35? Assume a 365-day year. Do not round intermediate calculations. Round your answers to two decimal places. Nominal cost of trade credit: % Effective cost of trade credit: %
Cost of Trade Credit What are the nominal and effective costs of trade credit under the...
Cost of Trade Credit What are the nominal and effective costs of trade credit under the credit terms of 2/15, net 40? Assume a 365-day year. Do not round intermediate calculations. Round your answers to two decimal places. Nominal cost of trade credit: Effective cost of trade credit:
Which of the following is not a type of short-term financing? a. Trade credit b. Domestic...
Which of the following is not a type of short-term financing? a. Trade credit b. Domestic stock c. Accounts receivable financing d. Line of credit e. Accruals
Johnson Electronics is considering extending trade credit to some customers previously considered poor risks. Sales would...
Johnson Electronics is considering extending trade credit to some customers previously considered poor risks. Sales would increase by $146,000 if credit is extended to these new customers. Of the new accounts receivable generated, 8 percent will prove to be uncollectible. Additional collection costs will be 6 percent of sales, and production and selling costs will be 72 percent of sales. The firm is in the 10 percent tax bracket. a. Compute the incremental income after taxes. Incremental income after taxes...
7. Box Lock has annual sales of $4 million and is considering implementing a lockbox system, which would reduce customer collection float by four days. Box Lock has a cost of capital of 13 percent. The annual after-tax cost of the lockbox system is $2000. Assume a 365-day year, should Box Lock implement the system? What would be the benefit, in dollar amount, if it did? 8. Geo-M is considering adding a cash discount to its credit terms. If Geo-M...
whenever possible? a. Requisition, control, and disbursement of inventory b. Requisition of inventory and conversion of inventory to ser c. Requisition, receipt, and control of inventory d. All of the above 6. Which of the following is a tool used in an analytical review of inventory to see if inventory is being stolen? a. Subtracting Cost Of Goods Sold from Net Sales, dividing the result by Net Sales, then comparing the result to the ratio for prior years b) Dividing...
Cost of Trade Credit What are the nominal and effective costs of trade credit under the credit terms of 2/15, net 40? Assume a 365-day year. Do not round intermediate calculations. Round your answers to two decimal places. Nominal cost of trade credit: Effective cost of trade credit:
Johnson Electronics is considering extending trade credit to some customers previously considered poor risks. Sales would increase by $146,000 if credit is extended to these new customers. Of the new accounts receivable generated, 8 percent will prove to be uncollectible. Additional collection costs will be 6 percent of sales, and production and selling costs will be 72 percent of sales. The firm is in the 10 percent tax bracket. a. Compute the incremental income after taxes. Incremental income after taxes...
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