SOLVED

276. As the owner of Kingdom’s Treasures, Jerry negotiates with suppliers who hope to place their products in his high volume retail gift store. Jerry finances his inventory through the ________ credit offered by suppliers who delay his payments for up to 60 days after the merchandise has been delivered to his business. A. residual B. trade C. commercial D. LIFO 277. Virginia Supply offers their customers trade credit with terms 2/15 net 30. This implies that: A. Virginia’s customers have very little incentive to pay within the discount period. B. paying within 30 days will let a customer deduct 15% off the invoice price. C. most customers will pay their bill within 2 days in order to take the maximum discount. D. the annual financing cost of failing to pay within 15 days is about 48%. 278. Delaware Aluminum uses its stock of unsold aluminum products as collateral for a short term loan. This arrangement represents: A. a secured loan. B. a revolving credit agreement. C. factoring. D. an unsecured loan. 279. The financial manager of Carolina Graphics negotiated a ________ with her bank that allows Carolina to borrow up to $50,000 without collateral. This arrangement eliminates the need to renegotiate the terms of the loan and complete new paper work each time Carolina borrows money. The preapproved short-term loan agreement is contingent upon the bank having the funds available. A. line of credit B. factor agreement C. cash flow conversion D. renewable income option 280. Jackson Plumbing, a medium-sized company, wants to guarantee that it can obtain short-term funds to meet unexpected future cash needs. Which of the following strategies would best meet the financing needs of Jackson Plumbing? Financial managers at Jackson Plumbing should: A. issue commercial paper as needed. B. request that the firm’s board of directors approve an issue of additional shares of common stock. C. arrange for a revolving credit agreement with Jackson Plumbing’s commercial bank. D. eliminate credit sales to improve their cash inflows and reduce the firm’s investment in accounts receivable. Â Â