Question
Shameless Promotion Company provides outdoor sales event management and equipment, including inflatable signs and large tents, for auto dealerships. The business is quite seasonal, earning
Shameless Promotion Company provides outdoor sales event management and equipment, including inflatable signs and large tents, for auto dealerships. The business is quite seasonal, earning over 40 percent of its revenue during the summer months. Sales have grown by over 20% during each of the last three years, and as a result, the level of the company's CORE accounts receivable at its winter low point has also grown significantly. The company expects sales to level off as they reach market saturation in about five years. Which credit facility would be most appropriate to finance this increasing level of core accounts receivable? 1)Term loan with small payments now and a large balloon payment in two or three years 2)Committed short-term line of credit with an annual cleanup during the winter 3)A bridge loan at the beginning of the summer that would be repaid in the fall 4)A reducing revolver on which they could borrower as receivables increase, then repay over four or five years once sales growth slows
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