Taylor and Swanson currently sells on a cash basis only. The firm is considering switching to a 30-day credit policy. When analyzing the cost benefit of this switching policy, the firm should consider the percentage discount to be given to cash customers

Question

Quizplus · Accepted Answer

The percentage discount to be given to cash customers is a relevant factor to consider when analyzing the cost-benefit of switching to a 30-day credit policy. This is because the discount will affect the amount of revenue that the firm generates from cash sales, which in turn will affect the overall profitability of the credit policy.

Taylor and Swanson Currently Sells on a Cash Basis Only