Read the formula and its variables
The comparison is the discounted early amount versus the full later amount under the stated terms.
| Input | Meaning |
|---|---|
| d | Early-payment discount as a fraction |
| 1−d | Discounted proportion of invoice |
Inspect a stated example
A 2% discount gives an additional-period cost of 2/98, approximately 2.0408%.
The illustrative inputs are not an actual issuer’s data. Match balance coverage, flow period and units before applying the formula.
Keep the conclusion within the evidence
The period is the gap between eligible payment dates, not necessarily the full net term.
A ratio change can motivate a further question. It does not automatically identify the transaction, risk or operational outcome that produced it.