Early Settlement Discount

FM – May 2021 – L2 – Q5b – Inventory Management

Evaluate whether the company should continue using a bank loan to finance inventory purchases and take advantage of early payment discounts.

Question

Would you advise the company to continue to take the bank loan to pay for the cost of
inventory purchases within the discount period to enjoy the supplier’s early settlement
discount? Support your answer with relevant computations.

Answer

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Tags: Bank Loan, Early Settlement Discount, Inventory Financing
Level: Level 2

Topic: Inventory Management
Series: MAY 2021

Question Tag: Early Settlement Discount

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FM – May 2021 – L2 – Q5b – Inventory Management

Evaluate whether the company should continue using a bank loan to finance inventory purchases and take advantage of early payment discounts.

FM – May 2021 – L2 – Q5b – Inventory Management

Evaluate whether the company should continue using a bank loan to finance inventory purchases and take advantage of early payment discounts.

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FM – May 2021 – L2 – Q5b – Inventory Management

Evaluate whether the company should continue using a bank loan to finance inventory purchases and take advantage of early payment discounts.

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FM – May 2021 – L2 – Q5b – Inventory Management

Evaluate whether the company should continue using a bank loan to finance inventory purchases and take advantage of early payment discounts.

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