Question
5.1 Assume that a company is negotiating to do business with a new supplier who has offered credit terms of 3/15, net 30. The financial
5.1 Assume that a company is negotiating to do business with a new supplier who has offered credit terms of 3/15, net 30. The financial manager is planning to delay payment for an additional 10 days i.e. to only settle the account after 40 days. The current bank overdraft rate for the firm is 25% per annum. Calculate the effective cost of finance provided by this supplier and comment on the financial managers plans. (5) 5.2 An aspect of working capital policy which requires managerial attention is the manner in which the items are financed.
Required:
Discuss aggressive, moderate and conservative policies in this regard
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