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Trade discounts are deductions in price given by the wholesaler or manufacturer to the retailer at the list price or catalogue price. Cash discounts are reductions in price given to the debtor to motivate the debtor to make payment within specified time. These discounts are intended to speed payment and thereby provide cash flow to the firm. They are sometimes used as a promotional device.
A range of concepts is available to implement dynamic discounting into supply chain finance (SCF): dynamic discounting can be seen as a comparatively simple form, whereby the supplier grants a cash discount for early payment of its invoices – the amount of the reduction and the time of payment are quickly and freely negotiable.
The discount factor, DF (T), is the factor by which a future cash flow must be multiplied in order to obtain the present value. For a zero-rate (also called spot rate) r, taken from a yield curve, and a time to cash flow T (in years), the discount factor is:
Each cash inflow/outflow is discounted back to its present value (PV). Then all are summed such that NPV is the sum of all terms: where: t is the time of the cash flow i is the discount rate, i.e. the return that could be earned per unit of time on an investment with similar risk R t {\displaystyle R_ {t}} is the net cash flow i.e. cash inflow – cash outflow, at time t. For educational ...
Discounted cash flow. The discounted cash flow (DCF) analysis, in financial analysis, is a method used to value a security, project, company, or asset, that incorporates the time value of money. Discounted cash flow analysis is widely used in investment finance, real estate development, corporate financial management, and patent valuation.
Debits and credits in double-entry bookkeeping are entries made in account ledgers to record changes in value resulting from business transactions. A debit entry in an account represents a transfer of value to that account, and a credit entry represents a transfer from the account. [ 1 ][ 2 ] Each transaction transfers value from credited accounts to debited accounts. For example, a tenant who ...
In accounting, the revenue recognition principle states that revenues are earned and recognized when they are realized or realizable, no matter when cash is received. It is a cornerstone of accrual accounting together with the matching principle. Together, they determine the accounting period in which revenues and expenses are recognized. [1] In contrast, the cash accounting recognizes ...
Generally Accepted Accounting Principles (GAAP or U.S. GAAP or GAAP (USA), pronounced like "gap") is the accounting standard adopted by the U.S. Securities and Exchange Commission (SEC) [1] and is the default accounting standard used by companies based in the United States. The Financial Accounting Standards Board (FASB) publishes and maintains the Accounting Standards Codification (ASC ...