Question
A manufacturer of snowshoes has received an unusually large contract to deliver snowshoes to a new and very creditworthy customer. The business will need an
A manufacturer of snowshoes has received an unusually large contract to deliver snowshoes to a new and very creditworthy customer. The business will need an additional loan to fund its production for this contract. It will take approximately three months to manufacture the inventory to fulfill this contract. Which of the following best describes the probable duration and repayment source if the lender decides to make this additional loan?
A) the duration will be three months and the repayment source is collection of accounts receivable from other customers.
B) the duration will be serval operating cycles over more than one year and the repayment source of cash flow from profitable operations.
C) the duration will be three months plus the collection period and the repayment source is profit on the contract.
D) the duration will be three months plus the collection period and the repayment source is collection of the account receivable from the new customer.
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