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In 2019, Sisca Corporation has sales of $150 million, and the cost of goods sold of $90 million. At the end of 2019, Sisca Corporation
In 2019, Sisca Corporation has sales of $150 million, and the cost of goods sold of $90 million. At the end of 2019, Sisca Corporation also has accounts receivable of $30 million, accounts payable of $33 million, and inventory of $24 million. Assume 365 days in a year.
(b) A supplier has offered Sisca Corporation trade credit terms of 3/10, net 50. Explain how to interpret the terms of credit. Calculate the effective annual rate. Assume the supplier sells the product for $100. (3 marks)
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