Select Page

Boris B2B Inc. purchases its inventory from Johnson Supplies Inc. subject to the following terms: 2/10, n/30. Boris is not exactly a “cash cow”, is short of cash and is therefore debating whether it makes sense at all to take advantage of the discount (at the cost of disbursing cash for these purchases 20 days earlier than otherwise it would be doing). If Boris could borrow money at 10% from a local bank to cover any cash shortfall … should it take advantage of the discount offered by Johnson Supplies Inc. ? Explain