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CTP · Question #747
(Topic 8) ABC Company offers trade terms of 2/10 NET 30. For several reasons, ABC has decided to eliminate the requirement for a letter of credit from one of its customers. If ABC puts the customer…
The correct answer is C. ABC's working capital is unchanged. See the full explanation below for the reasoning.
Question
- (Topic 8)
ABC Company offers trade terms of 2/10 NET 30. For several reasons, ABC has decided to eliminate the requirement for a letter of credit from one of its customers. If ABC puts the customer on open book credit, what is the MOST LIKELY outcome?
Options
- AABC's credit rating will suffer.
- BThe customer's working capital has deteriorated.
- CABC's working capital is unchanged.
- DThe customer's cost of borrowing will increase.
How the community answered
(46 responses)- A11% (5)
- B9% (4)
- C76% (35)
- D4% (2)
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