Working Capital Management: "Free" Trade Credit Calculation
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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. Net purchases amount to $500,000 per year. On average, how much "free" trade credit does the firm receive during the year? (Assume a 365-day year.)
A. $20,548
B. $21,575
C. $22,654
D. $23,787
E. $24,976
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Solution Summary
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. Net purchases amount to $500,000 per year. On average, how much "free" trade credit does the firm receive during the year? (Assume a 365-day year.)
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