What is the effective cost of trade credit

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Reference no: EM131919687

COGS are 80% of Sales. You collect 80% of sales in the month of sale and the remaining 20% in the month following the sale. You purchase 60% of your COGS in the month of sale and 40% in the month prior to the sale. You pay for 70% of purchases in the month that it is purchased and the remaining 30% in the month after it is purchased. What is the Effective cost of trade credit if the terms are 2/15, net 50 assuming that you forego the discount and pay on the 50 th day?

Reference no: EM131919687

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