Brook Plumbing has a line of credit of $800,000 with peak usage in August and a low point in January. The company's notes payable (the amount outstanding on the line of credit) at year end has been increasing, while long-term debt is decreasing. Sales increased at a rate of between 12 and 13 percent in the last two years. The company expects continued growth and has requested an increase in the line of credit to $1 million. What is your reaction to this request? Approve. Brook Plumbing is clearly growing and both inventory and receivables are increasing; it makes sense that the company would need to increase the line of credit to support the additional sales Approve. Inventory alone is over $1 million at year end, so the company needs a line of credit that will accommodate the increases in current assets Decline. With sales of $6.5 million, a line of credit of $1 million is unreasonable. It would be better to start backing out of this relationship Find out more. Get monthly outstandings on the line of credit. If the line is not cleaned up annually, the amount in use at the low point of the sales cycle may indicate a need for long-term financing of core current assets instead