Question

Sue has sourced four wholesalers from where she will buy most of her stock, including arrangements with two suppliers for 30 days credit, while the others are Cash on Delivery (COD).
She has purchased her store fittings and has $15000 of stock (Stock at Valuation - or SAV), with a further $10000 on 30-day credit). The business has an operating cash reserve of $20000.



How many wholesalers require terms of cash on delivery?

Answer 1

The difference between the total number of wholesalers and those that supply on 30-day credit, gives the number that require cash on delivery as 2

How can the question be analyzed to find the required number of wholesalers?

The number of wholesalers Sue has sourced = 4

Terms of two suppliers = 30 days credit

Amount of stock Sue has = $15000

Amount of stock on credit = $10000

Operating cash reserve of the business = $20000

Required:

The number of wholesalers that require terms of cash on delivery

Solution:

Given that the number of wholesalers = 4

The number number of suppliers (wholesalers) that supply on 30-day credit = 2

Therefore;

The number of wholesalers that require terms of cash on delivery = 4 - 2 = 2

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