Salas Modernas, SA, has experienced liquidity problems in recent months, due, above all, to the fact that in the past it applied a very liberal credit policy, under which the necessary investigations were not carried out to determine whether a potential client was or not a good credit subject, nor to evaluate whether the credit terms were adequate. On the other hand, their collection practices were very deficient. Although it has been correcting some of these failures, the repercussions of previous practices are still felt in the company and are seen, above all, in a significant balance of overdue loans.

In March of this year, the company purchased materials on credit from one of its suppliers for $130,000 in 30 days and with a prompt payment discount of 5%, if paid within 15 days. After 15 days, the company had not sold any rooms and did not have enough cash to pay and take advantage of the discount. When the deadline arrived, the situation had not improved. Sales were very few and collections were almost nil. The supplier demanded payment, so the company negotiated with a bank for a 60-day loan with an interest rate of 13% per year.

The following is requested:

Calculate the total amount the company must pay the bank at the end of the term.

Determine what it cost the company not to have sufficient liquidity to pay the supplier, according to the originally negotiated conditions.

What specific recommendations would you make to the management of Salas Modernas, SA, to improve its liquidity in the future?