What is the difference between free trade credit and costly trade credit?

What is the difference between free trade credit and costly trade credit?

Category:
June 23, 2021
5 Views
0
0

What is the difference between free trade credit and costly trade credit?

Answer and ExplanationSolution by a verified expert

Explanation

Free trade credit is trade credit obtained without a cost. Therefore, it consists of all trade credit that is available without forgoing any discounts. Costly trade credit is any trade credit over and above the free trade credit.
 
For example, consider a credit term of 2/10, net 30. This means that if the payment is made within 10 days, the customer is eligible for a 2% discount; if the customer does not want to avail the discount, then the net payment has to be made within 30 days. In this case, the first 10 days are free trade credit as all purchases are free. The following 20 days is a costly trade credit as the additional credit period comes at an implicit cost of not availing the discount.

Sample Response

Free trade credit is credit received during the discount period. Costly trade credit is credit taken in excess of the free trade credit.

Purchase this answer to view it.
Click the button to login/signup and buy full solution at 2 USD only.

The Best Research Paper Writing Service

Would you want to pay someone to write your paper professionally from scratch? 100% Original and 0% AI Content!.

🎓 Write my Essay
📚 Write my Persuasive Essay
📋 Humanize AI Content for Turnitin
💻 Write my Reflective Essay
📑 Write my Research Paper
📜 Write my Thesis Paper
📘 Write my Dissertation
📋 Write my Case Study
📝 Write my Online Exam
✒️ Write my Term Paper
Write my Paper