Duk Yu, a Beverage Company, Buys Its Raw Materials from Nessange

question 6

Multiple Choice

Duk Yu, a beverage company, buys its raw materials from Nessange, a fruits and vegetables exporting company, without making any payment at the time of purchase. Instead, Nessange allows Duk Yu to pay the total purchase amount within a period of six months. Which of the following short-term financing options is being used by Duk Yu in the given scenario?

• A) Trade credit
• B) Factoring
• C) Short-term bank loans
• D) Commercial paper

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Definitions:

Sale Price

The final price at which an item or service is sold, often after discounts are applied.

Operating Expenses

Costs associated with the day-to-day functions of a business, excluding the cost of goods sold, including expenses like rent, utilities, and payroll.

Mark-up

The upcharge on the cost of merchandise to accommodate overhead expenses and profitability.

Retail Price

The total cost at which a product is sold to the end consumer, inclusive of all taxes, shipping, and handling fees.