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Hello John,
Hope you are fine.
I need a help from you.
I want to know what is the basis of the percentage. Is it based on Credit Sales Revenue.
Lets say the % cost of early settlement discount = 44 %
With what figure shall this percentage be multiplied with to find the actual cost of early settlement discount?You wouldn’t normally multiply it by anything 🙂
If you watch my free lectures you will see that there are either ‘simple’ discounts, in which case you only really need to calculate the equivalent annual % in order to decide whether or not the discount is worth taking, or – much more likely – we need to take several factors into account and calculate the $ costs and benefits per annum, In this second case we con’t need (and can’t calculate) and annual percentage.
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