The Calculated Cost of Trade Credit for a Firm That

question 48

True/False

The 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.

---

Definitions:

Price Index

A statistical measurement that tracks changes in the price level of a basket of goods and services over time.

Inventories

The raw materials, work-in-process products, and finished goods that are considered to be the portion of a business's assets that are ready or will be ready for sale.

GDP

The total value of all end products and services created within a country's borders during a certain time frame defines Gross Domestic Product.

Production

The process of creating goods or services by combining labor, capital, and raw materials in order to meet consumer demand.