Question

The Fruitiest Candy Company finds that from time to time it needs short-term funds to cover its operating expenses. It wants to establish a prearranged loan with a bank but has not found a bank that will guarantee such a loan. Perplexed by this, the management team asks you how they should proceed. You recommend that they
A) file a suit against the banks.
B) find a bank out of state or out of the country that will guarantee that the money will be available when needed.
C) simply file a claim with the FDIC.
D) retaliate by withdrawing all cash from the local bank and canceling all certificates of deposit.
E) set up a line of credit with a bank that offers a revolving credit agreement.

Answer 1

Answer:

The answer is: E) set up a line of credit with a bank that offers a revolving credit agreement.

Explanation:

A revolving credit is a credit line where the bank charges a business a commitment fee and allows the business to borrow money and use it only when they need the funds. This type of credit line lets the business decide when to use the money according to their cash flow needs.