Tidewater Distributors Is Successfully Using Short-Term Financing to Buy Inventory

question 64

Multiple Choice

Tidewater Distributors is successfully using short-term financing to buy inventory for resale. As sales climb, the managers realize that they must decide what to do with the money. Since you are the financial manager, they ask for your advice. You advise them to first

• A) repay the short-term obligations out of the sales revenue.
• B) use the money to buy a yacht for the managers.
• C) increase all employees' wages.
• D) enroll all the salespeople in a sales training course.
• E) borrow more money.

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Definitions:

Bargaining Power

The capacity of one party to influence the terms and conditions of an agreement in their favor during negotiations with another party.

Substitution Possibilities

The extent to which alternative products or services can replace each other in satisfying consumers' needs or preferences.

Cross-Market Competition

Competition that occurs between businesses operating in different markets or sectors but competing for the same customer base.

Pure Monopoly

A market structure where a single seller exclusively controls the supply of a product or service with no close substitutes.