Purchase Solution

Free Trade Credit Calculation

Not what you're looking for?

Ask Custom Question

Buskirk Construction buys on terms of 2/15, net 60 days. It does not take discounts, and it typically pays on time, 60 days after the invoice date. Net purchases amount to $450,000 per year. On average, how much "free" trade credit does the firm receive during the year? (Assume a 365-day year, and not that purchases are not of discount.)

Purchase this Solution
Solution Summary

Buskirk Construction buys on terms of 2/15, net 60 days. It does not take discounts, and it typically pays on time, 60 days after the invoice date. Net purchases amount to $450,000 per year. On average, how much "free" trade credit does the firm receive during the year? (Assume a 365-day year, and not that purchases are not of discount.)

Solution provided by:
Edwin Sinclar, MBA
Education
  • MBA, Aspen University
  • Bachelor of Science , Berea College
Recent Feedback
  • "Thank u"
  • "Thank You!"
  • "Thanks!"
  • "Thank you so much"
  • "Great job...thanks."
Purchase this Solution
Free BrainMass Quizzes
Managing the Older Worker

This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce

Balance Sheet

The Fundamental Classified Balance Sheet. What to know to make it easy.

Organizational Behavior (OB)

The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.

Situational Leadership

This quiz will help you better understand Situational Leadership and its theories.

Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

View More Free Quizzes
Related BrainMass Solutions

  • Working Capital Management: "Free" Trade Credit Calculation

    146824 Working Capital Management: "Free" Trade Credit Calculation Filbeck Company (Buskirk Construction) buys on terms of 2/15, net 30 days. It does not take discounts, and it typically pays 30 days after the invoice date.

  • Cash Management: Dome has a credit sale of $ 144000 yearly

    use the full sales of $144000 for your calculation of receivable.

  • Cost of Trade Credit, Cash Conversion Cycle

    Inventory Turnover = 365/Inventory Conversion Period Inventory Turnover = 365/75=4.8 times The solution explains the calculation of cost of trade credit and the cash conversion cycle

  • Free trade credit/cash conversion cycle

    In a free trade credit there is no cash discount offered and so there is no loss if the cash discount is not taken as there is no cash discount and so essentially the total credit period is the free credit period.

  • Effective interest rate

    On average, what is the dollar amount of costly trade credit (total credit â?" free credit) the firm receives during the year? (Assume a 365-day year, and note that purchases are net of discounts.) 5. Affleck Inc.'

  • Costly Trade Credit

    On average, what is the dollar amount of costly trade credit (total credit-free credit) the firm receives during the year? (Assume a 365-day year, and not the purchases are net of discounts.)

  • Trade Credit Rates

    The attached file gives the calculation for the trade credit rates. The interest rate is calculated by using the Simple Interest formula. The time period is the difference between the total credit period and the cash discount period.

  • Accounts Receivable and Days Sales Outstanding

    What is the percentage cost of trade credit to customers who take the discount and to those who do not take it? D.

  • Working Capital Management, Credit and Policies

    Trade credit is sometimes called free as there is no interest payable on amount taken for trade credit. So there is no explicit cost.

View More Related Solutions