Credit term '4/20 net 90' means :

CS Executive · Financial and Strategic Management · PYQS · June 2021
Credit term '4/20 net 90' means :
(A) 0.40% discount will be granted if the customer pays within 90 days
(B) 20% discount will be granted if the customer pays within 4 days, and if he does not avail the offer he must make payment within 90 days
(C) Net 90% discount will be granted if the customer pays 4 times the amount due within 20 days
(D) 4% discount will be granted if the customer pays within 20 days, otherwise he must make payment within 90 days

Answer & Explanation:

Correct Answer: Option (D)

Official answer key: (D).

Topics: Working Capital Management

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