As a rule, managers should try to always use the free component of trade credit but should use the costly component only after comparing its costs to the costs of similar credit from other sources.

Question

Quizplus · Accepted Answer

This statement is correct. Managers should always try to use the free component of trade credit, which is when payment is made within the stated credit terms. However, if they need to use the costly component, which is when payment is made after the stated credit terms and interest is charged, they should compare the costs to similar credit from other sources to ensure it is the most cost-effective option.

As a Rule, Managers Should Try to Always Use the Free