AR / AP Flashcards
1
Q
What is the calculation for cost of financing receivables?
A
Receivables balance X Interest (overdraft) rate
2
Q
Where the receivables balance is not given in a question, what is the formula for calculating it?
A
Sales X debtor days
—————–
365
3
Q
How is the annual cost of early settlement discount calculated?
A
(1+(discount/amount left to pay) to power of no of periods-1
Where no. of periods = 365 | 52 | 12
no of days/weeks/months earlier the money is received
