A 2/10, Net 30 Credit Policy

question 192

Multiple Choice

A 2/10, net 30 credit policy:

• A) Is an expensive form of short-term credit if a buyer foregoes the discount.
• B) Provides cheap financing to the buyer for 30 days.
• C) Is an inexpensive means of reducing the seller's collection period if everyone takes the discount.
• D) Tends to have little effect on the seller's collection period due to the high effective interest rate.
• E) Tends to increase a firm's investment in receivables as compared to a straight net 30 policy.

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Definitions:

Macro Processes

Refers to the overarching, large-scale operations or functions within a system or organization that influence its overall performance.

Supply Chain

A supply chain encompasses the sequence of processes involved in the production and distribution of a commodity, from the procurement of raw materials to the delivery of the finished product to the end consumer.

Supply Chain Flows

The movement of goods, information, and finances as they pass through a set of entities from supplier to manufacturer to wholesaler to retailer to consumer.

Importance

The state or fact of being of great significance, value, or consequence.