Question 2ECM Manufacturing Company Limited has three (3) possible suppliers, all of whichoffer different credit terms. Apart from the slight differences in credit terms, theirproducts and services are virtually identical. The credit terms offered by these suppliersare shown in table shown on the next page.SupplierCredit TermsSupplier 11/10 net 30 EOMSupplier 22/20 net 75 EOMSupplier 33/10 net 50 EOMa.Assuming a 365-day year, answer the following.Identify and describe two major sources of spontaneous short-term financingavailable to ECM Manufacturing please include Accounts payable andAccrued Expenses are the two spontaneous short-term financingavailable to Ecm Manufacturingb.Calculate the approximate cost of giving up the cash discount from eachsupplier

1. Sources of Spontaneous Short-Term Financing: - Accounts Payable: This represents the amount owed…

Answered: Question 2 ECM Manufacturing Company…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter21: Supply Chains And Working Capital Management

Section: Chapter Questions

Problem 6MC

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If a firm's supplier has a 3/10/60 credit policy, the cost of trade credit per period is equal to O a. 3.09% O b. 22.58% OC 3% O d. 97% O e. None of the above
If a firm's supplier has a 3/10/60 credit policy, the cost of trade credit per period is equal to a. 3.09% b. 22.58% c. 3% d. 97% e. None of the above
One Corporation has two potentialsuppliers. Both are supplying the items atsimilar list prices and trade,discounts.However, Supplier A.offered a credit term of2/10, n/30 and the.other offered a term of3/10, n/40. Which of the following statementsis true? a. Alpha should choose Supplier A and pay on the 10th day.b. Alpha should choose Supplier B and pay on the 10th day.c. Alpha can choose either supplier and always pay on the 10th day.d. If Alpha chose Supplier B, the former should pay on the 30th day so that it can maximize the trade discount
25 [Question text] Credit and collection policies affect all of the following EXCEPT _____________________. Select one: A. level of sales B. length of time before credit sales are collected C. pricing policies D. terms of sales
7. If company A has current ratio of 1.3 while company B has a current ratio of 2.3, which is a better company? 8. Which ratio is more relevant - quick ratio or current ratio? 9. What other factors would a bank or supplier look into in deciding whether to lend short term credit?
1. How should the $25 Referral Credit be recorded in Runway’s incomestatement?2. When would Runway record the $25 Referral Credit? What are the journalentries Runway would record when the $25 Referral Credit is earned bythe Existing Customer? What are the journal entries Runway would recordwhen the $25 Referral Credit is redeemed against a $100 purchase madeby the Existing Customer?3. Runway is planning to adopt IFRSs in the near future. What is the relevantaccounting guidance it would follow under IFRSs?
The contra revenue account that represents the reduction in the amount paid by a credit customer if payment is made within a specified period of time is known as which of the following: O Contra revenue account O Sales allowance account O Sales discount account O Allowance for uncollectible accounts ASUS f3 f4 f5 f6 f7 f8 f9 f10 f11 区ロ/京 %24 & 3 4. 7. 8 9. 01 Y U G H. J K 16 5 图

What are the five Cs of credit? Explain why each is important? 2. What are some of the factors that determine the length of the credit period? Why the length of the buyer’s operating cycle often considered an upper bound on the length of the credit period? 3. In each of the following pairing, indicate which firm would probably have a longer credit period and explain your reasoning. a.Firm A sells a miracle cure for baldness; Firm B sells toupees. b. Firm A specializes in products for landlords; Firm B specializes in products for renters. c. Firm A sells to customers with an inventory turnover of 10 times; Firm B sells to customers with an inventory turnover of 20 times. d. Firm A sells fresh fruits; Firm B sells canned fruit. e. Firm A sells and install carpeting; Firm B sells rugs. 3. If a company’s inventory carrying costs are Php 5 million per year and its fixed order costs are Php 8 million per year, do you think the firm keeps too much inventory on hand or too…
A company's investment in receivables is influenced by several variables, including: 10701 3 Multiple Choice U Celeste The level of sales. The nature of the product or service sold. The credit and collection policies. All of these answer choices are correct. Saved < Prev 36 of 75 333 Next >
Firms usually offer their customers some form of trade credit. This allowance comes with certain terms of credit, which affect the cost of asset of sale for the buyer as well as the seller. Consider this case: Free Spirit Industries Inc. buys on terms of 1/20, net 45 from its chief supplier. If Free Spirit receives an invoice for $1,254.98, what would be the true price of this invoice? (Note: Round all intermediate calculations to four decimal places, and your final answer to two decimal places.) O $1,304.55 $1,056.07 $1,242.43 O $1,118.19 The nominal annual cost of the trade credit extended by the supplier is , assuming a 365-day year. (Note: Round all intermediate calculations to four decimal places, and your final answer to two decimal places.) Suppose Free Spirit does not take advantage of the discount and then chooses to pay its supplier late-so that on average, Free Spirit will pay its by paying late. (Note: supplier on the 50th day after the sale. As a result, Free Spirit can…
11:/13 Problem 2-2U S) William Company operates a customer loyalty program. T entity grants loyalty points for goods purchased. The loyalty points can be used by the customers in exchane for goods of the entity. The pointa have no expiry date. During 2020, the entity issued 100,000 award credits and expects that 80% of these award credits shall be redeemed The total stand-alone selling price of the award credita granted is reliably measured at P2,000,000. In 2020, the entity sold goods to customers for a total consideration of P8,000,000 based on stand-alone selling price. The award credits redeemed and the total award credits expected to be redeemed each year are as follows: Redeemed Expected to be redeemed 2020 2021 30,000 15,000 80% 90% 1. What is the revenue from points for 2020? 1,600,000 b. a. 1.500,000 600,000 d. 480,000 2. What is the revenue from points for 2021? a. 240,000 b. 200,000 120,000 04.29
Question 1 A company observes that the value date for an electronic transfer payment to one of its suppliers for providing it with components, occurs 3 days earlier than if it issued a cheque for the same payment and value. So the company prefers to pay the supplier by cheque. When it realizes this, the supplier offers a discount to the company to incentivise it to pay by electronic transfer instead of by cheque. How much of a discount in percentage terms should the discount offered by the supplier be? Assume that an electronic payment cost is 0.5 percent higher than the cost of issuing a cheque and that the prevalent market discount rate is 5 percent. Also assume that there is float neutrality.

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