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    Trade Credit Terms

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    What is the cost of not taking the suppliers' discounts?

    Reed's purchased about 80% of its purchases on terms of 3/10, net 60 and did not take cash discounts offered by the suppliers. Accounts are now 40 days past due.

    Cost of goods - 1,42870.2 67.0 (industry standard).

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    FORMULA - Cost of not taking discount = discount % /(100 - discount%) ...

    Solution Summary

    The solution identify the cost of not taking credit terms offered by the suppliers.