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Cost of Trade Credit Calculator

The cost of trade credit calculator can be used to calculate the annualized cost of offering early payment discounts to customers or alternatively of not taking early payment discounts from suppliers.

Cost of Trade Credit Formula

The calculator uses the cost of trade credit formula based on a 365 day year as shown below:

Cost of trade credit =(1 + d /(1 - d)) (365 / (Normal days - Discount days)) - 1

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M91705122
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