Question

Safety Window and Door Co. 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

Answer 1

Answer:

free credit received $18,492.15

Explanation:

450,000 per year / 365 days per year = 1,232.876712328767

Then, the credit stands for 15 days:

1,232.876712328767 x 15 days = 18,493.15

The company mades average purchase for 1,232 which do not yield interest for 15 days