Calculated Cost of Trade Credit for a Firm That Buys

question 104

True/False

calculated cost of trade credit for a firm that buys on terms of 2/10 net 30 is lower (other things held constant) if the firm plans to pay in 40 days than in 30 days.

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Definitions:

Authorized Shares

The highest quantity of shares that a company is authorized to issue according to its articles of incorporation.

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock and often pays dividends at a fixed rate.

Dividends

Payments made by a corporation to its shareholder members, distributing a portion of the company's earnings.

Owners

Individuals or entities that possess legal rights and control over a business or asset.