Total purchases are $130,000 and credit purchases are 80% of total purchases. If trade creditors at the beginning of the period are $15,000 and at the end of the period are $13,000m the average settlement period for creditors, in days, is:

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Credit purchases are 80% of $130,000, which equals $104,000. The average trade creditors are ($15,000 + $13,000) / 2 = $14,000. The average settlement period for creditors is calculated as (Average Trade Creditors / Credit Purchases) * 365. Substituting the values, we get (14,000 / 104,000) * 365 = 49 days.

Total Purchases Are $130,000 and Credit Purchases Are 80% of Total