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Ex - Oil, a Venezuelan producer and exporter of oil recently signed a contract with Imp - Oil Inc., a Greek importer of oil. Both
ExOil, a Venezuelan producer and exporter of oil recently signed a contract with ImpOil Inc., a Greek importer of oil. Both companies agreed to renegotiate the price on a quarterly basisas oil prices are set on the exchange. Furthermore, ExOil allowed open account terms net days as per industry standards.Prior to continuing, ExOil conducts a thorough risk assessment on the ImpOil before bargaining about trade terms. ExOil gained access to ImpOil's financial records, which it used todetermine the company's financial leverage. ExOil discovered that the total debt amounted to EUR and the total assets amounted to slightly over EUR million. What should be ExOil's next step?
A Investigate alternative financing options for the deal, as ImpOil's total debt is too high proportional to its total assets.B Discuss open unlimited account terms with ImpOil, as its total debt ratio suggests a very low level of risk.C Compare this ratio with similar companies to determine if it is on par with industry ratios.D Increase production in Venezuela, as ImpOil has a large amount of free capital and is likely to invest in future purchases.
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