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Essay / Research Paper Abstract
This 3-page paper answers questions about credit terms, mergers and acquisitions.
Page Count:
3 pages (~225 words per page)
File: AS43_MTquescred.doc
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Unformatted sample text from the term paper:
there are methods other than strict barter (i.e., the exchange of cold, hard cash for a product or service) that are used. There is such a thing as "trade credit,"
in other words, the idea that the seller is extending very short-term credit to the buyer, with the idea that the buyer will pay the seller in a reasonable amount
of time in exchange for goods or services. This is where the concept of net terms comes in. A net term is a specific period of time after which payment
is required in full. Net terms can be delineated as the number of days after an invoice is issued, or the number of days after the end of the month
in which an invoice is issued. The term EOM ("end of month") is used with the latter method of obtaining payment. At any rate, "net 30" means that full payment
is required within 30 days of the invoices issuance (or net 30 EOM, which means within 30 days of the end of the month during which the invoice is issued).
Along these lines, the seller, of course, wants to obtain payment as quickly as possible, and will encourage the buyer to pay more
quickly by offering a discount. Typically such a discount is issued within days of issuance of an invoice (or days within a sale) - the idea here is that the
more quickly the buyer pays, the more willing the seller is to issue that discount. This is where terms such as 2/10 are used - this means that if the
buyer is able to pay within 10 days of the invoices issuances, hell receive a 2% discount on the sale. Breaking it down, terms of 2/10 net 30 means the
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