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6. The cost of trade credit Tucker Group Inc. is a relatively small player in its market. Its new Chief Financial Officer (CFO), Zachary Angelli,
6. The cost of trade credit Tucker Group Inc. is a relatively small player in its market. Its new Chief Financial Officer (CFO), Zachary Angelli, has suggested that its credit policy may be one possible source of the company's lower-than-desired sales. This is because Tucker currently sells all of its product on either a cash on delivery (COD) or a cash before delivery (CBD) basis, depending upon the buying volume of the customer. Zachary observed that one possible strategy to increase Tucker's sales is to offer trade credit to its most creditworthy customers. Offering trade credit will involve both risks and returns to Tucker. Indicate which of the following statements regarding these risks and returns are true or false. Tucker can offer credit terms without offering a cash discount. The availability of trade credit is beneficial to those customers of Tucker that might not otherwise be able to qualify for bank credit. This should increase Tuckers sales. This statement is: O False O True This statement is: O False O True
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