# Cash and treasury management practise question

Registered Posts: 17
edited June 2019

April 196,200
May 237,075
June 400,575
July 400,575

• Registered Posts: 44
edited July 2019
Lets approach this step by step
• The total purchases planned for 4 months is split equally to take advantage of the payment discount.
• That's £1,635,000 split equally for the 4 months. £408,750 each.
• That's the liability.
• Now, Clifton has decided to pay only the 50% in the month of purchase.
• April:
• 408750 X 50% X 96% (4% discount) = £196,200
• May:
• 408750 X 50% X 96% (4% discount)
• + £39240 X 100/96 (10% of April months liability but with no discount) = £237,075
• June:
• 408750 X 50% X 96% (4% discount)
• + £39240 X 100/96 (10% of May months liability but with no discount)
• + £156960 X 100/96 (40% of April months liability but with no discount) = £400,575
• July:
• 408750 X 50% X 96% (4% discount)
• + £39240 X 100/96 (10% of June months liability but with no discount)
• + £156960 X 100/96 (40% of May months liability but with no discount) = £400,575