When you should you repay trade credit obligation

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Reference no: EM131537597

1. Your firm has a re0investment rate of 7%. Further, your firm has just been offered trade credit terms of 1/15 net 30 for purchases made from a supplier. When you should you repay the trade credit obligation?

a. On day 15

b. On day 30

c. On day 20

d. On receipt

2. An increase in days’ payable outstanding would_______ the cash conversation cycle and reflect________ firm liquidity. Assume that all other factors are held constant

a. Increase, decreased

b. Decrease, increased

c. Decrease, decreased

d. Increase, increased

3. The earnings credit received by a depositing firm is positively influenced by which of the following?

a. Lower reserve requirement ratio

b. Higher reserve requirement ratio

c. Higher deposit float

d. Lower earnings credit rate

Reference no: EM131537597

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