A firm is offered credit terms of 1/10 net 45 EOM by a major supplier. The firm has determined that it can stretch the credit period (net period only) by 25 days without damaging its credit standing with the supplier
Assuming the firm needs short-term financing and can borrow from the bank on a line of credit at an interest rate of 14 percent, the firm should ________.
A) give up the cash discount and finance the purchase with the line of credit
B) give up the cash discount and pay on the 70th day after the date of sale
C) take the cash discount and pay on the first day of the cash discount period
D) take the cash discount and finance the purchase with the line of credit, the cheaper source of funds
B
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Which of the following is generally under the control of the financial manager?
A) the credit policies B) the actual level of sales C) the percentage of credit sales to total sales D) A and B
Inert cultures encourage risk taking by middle and lower-level managers
Indicate whether the statement is true or false