Lima Corporation Makes Purchases on Credit, and Its Suppliers Grant

question 11

Multiple Choice

Lima Corporation makes purchases on credit, and its suppliers grant it credit terms of 2/15, net 30. Assuming there are 360 days in a year, the effective annual rate of non-free trade credit if the firm did not take discounts but did pay on the due date is:

• A) 17.53%.
• B) 78.87%.
• C) 52.78%.
• D) 27.42%.
• E) 62.36%.

Understand the principles and applications of explanatory or causal models in forecasting.

Understand and calculate days' sales in work in process inventory.

Understand and calculate work in process inventory based on given days' sales.

Understand the lean business model and its application beyond manufacturing.

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Definitions:

Favorable Repayment Terms

Conditions of a loan that are beneficial to the borrower, such as lower interest rates or longer repayment periods.

Foreign Aid

Financial or material assistance provided by one country to another, often aimed at supporting economic development, health initiatives, or disaster relief.

Bilateral Aid

A form of financial assistance provided by one country directly to another to support development and welfare projects.

Multilateral Aid

Financial assistance provided by multiple countries or international institutions to support economic development in developing countries.