Identify the Best Type and Term of Credit

timer Asked: Mar 10th, 2014

Question description

Company ABC manufactures industrial valves and fittings used in a variety of underwater applications. Growth in oceanic oil and gas exploration has resulted in greater demand for the business's products. While sales are generally increasing, there are no seasons patterns. The owners have requested new financing to pay for expansion of the production facilities and to support increasing inventory. Which of the following describes the best type and term of credit to meet this borrowing need? A. Accounts payable financing from suppliers B. Long-term loan with repayment over several years C. Line of credit with an annual renewal and a 30-day clean up period D. One-year loan to be repaid from reduction in inventory

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