If a firm chooses to take a cash discount,it should

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If a firm chooses to take a cash discount, it should pay on the last day of the discount period. This allows the firm to take advantage of the discount offered by the supplier without sacrificing cash flow unnecessarily. Paying on the last day of the credit period or as soon as possible may not allow the firm to take advantage of the discount and may result in higher costs. Taking the discount no matter when the firm actually pays is not feasible as the supplier will only offer the discount during a specific period.

If a Firm Chooses to Take a Cash Discount,it Should