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Category > Business & Finance Posted 26 May 2017 My Price 11.00

A large manufacturing firm has been selling on a 3/1

A large manufacturing firm has been selling on a 3/10, net 30 basis. The firm changes its credit terms to 2/20, net 90. What change might be expected on the balance sheets of its customers?

  1. Decreased receivables and increased bank loans
  2. Increased receivables and increased bank loans
  3. Increased payables and decreased bank loans
  4. Increased payables and increased bank loans

Since the discount percentage is reduced from 3% to 2% and the credit period is increasd from 30 days to 9 days,the customers will be inclined to delay the payments and this will result in increase in their payables. Consequently, other souurce of finance, viz. bank loans will decrease.

 

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Status NEW Posted 26 May 2017 05:05 PM My Price 11.00

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