Purchase Solution

Reasons for trade credit; five Cs of credit; Optical Supply

Not what you're looking for?

Ask Custom Question

A. Cite and discuss five reasons for the extensive use of trade credit.

b. What are the five Cs of credit?

c. Optical Supply Company offers credit terms of 2/10, net 60. If Optical Supply is considering a change in its credit terms to one of those indicated, explain whether the change should increase or decrease sales.
(a) 2/10, net 30,
(b) net 60,
(c) 3/15, net 60,

Purchase this Solution
Solution Summary

**Attached is the answer**

Solution provided by:
Sonia Agarwal, CA
Education
  • Chartered Accountant (Equivalent to CPA in US), Institute of Charted Accountants of India
  • Bachelor of Commerce, West Bengal University
Recent Feedback
  • "I got this feedback and I wanted to know if you can explain it to me. I noticed something within your workings which I believe is incorrect.  It looks like you've mistaken the Debt ratio for the Equity Multiplier.  You've done a calculation to determine Return on Equity (ROE) but if you take a look at the ratios provided for us you'll see ROE listed on the bottom line already.  You can use ROE, Profit Margin and Total Asset Turnover to figure out the Equity Multiplier amount.  Equity multiplier is not provided for us and we need to calculate it.  I really hope this is helpful to you.  "
  • "Very attentive to detail. Answers are designed in easy to understand format."
  • "Fast response and thorough answer"
  • "thank you very much! "
  • "thank you so much !!!!!!!"
Purchase this Solution
Free BrainMass Quizzes
Understanding Management

This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.

Introduction to Finance

This quiz test introductory finance topics.

Academic Reading and Writing: Critical Thinking

Importance of Critical Thinking

Basics of corporate finance

These questions will test you on your knowledge of finance.

Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.

View More Free Quizzes
Related BrainMass Solutions

  • Trade Credit

    248458 Trade Credit Optical Supply Company offers credit terms of 2/10, net 60. If Optical Supply is considering a change in its credit terms to one of those indicated below, explain whether the change should increase or decrease sales.

  • Credit terms and sales.

    249717 Credit Terms Optical Supply Company offers credit terms of 2/10, net 60. If Optical Supply is considering a change in its credit terms to one of those indicated, explain whether the change should increase or decrease sales.

  • Credit Term Options' Effects on Sales

    248465 Credit Term Options' Effects on Sales Optical Supply Company offers credit terms of 2/10, net 60.

  • This post addresses credit terms and indebtedness.

    472323 Optical Supply Company offers credit terms of 2/10, net 60; indebtedness of the customer Optical Supply Company offers credit terms of 2/10, net 60.

  • Which C is most imporant in 5Cs of Credit

    35356 Which C is most important in 5Cs of Credit The most important of the five Cs of credit are ________ collateral & capacity, capital & collateral, character & capacity, or character & conditions I beleve - character & capacity - is

  • Ace Plumbing Supply

    comprised of a detailed explanation to answer what is your annual cost of the trade credit offer.

  • business risk, financial risk, and beta

    This is the cost of giving trade credit. The carrying cost increases with the amount of trade credit granted. The costs include the cost from delays in collections, bad debts, and management of credit.

  • Primary functions of the foreign exchange market and global companies

    Managers must decide if any of the valid reasons for hedging apply before choosing to hedge themselves.

  • Effective Cost of Trade Credit & Annual Interest Rate

    205875 Effective Cost of Trade Credit & Annual Interest Rate The D. J. Masson Corporation needs to raise $500,000 for 1 year to supply working capital to a new store.

View More Related Solutions