Jackson Plumbing,a medium sized company,wants to guarantee that it can obtain short-term funds to meet unexpected future cash needs.Which of the following strategies would best meet the financing needs of Jackson Plumbing? Financial managers at Jackson Plumbing should:

Question

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Arranging a revolving credit agreement with the firm's commercial bank would be the best strategy for Jackson Plumbing to guarantee short-term funds to meet unexpected future cash needs. This would provide the company with a flexible line of credit that they could draw from as needed, giving them the ability to quickly obtain the necessary funds to cover any unforeseen expenses without having to issue commercial paper or sell additional shares of common stock. Eliminating credit sales would not be a viable strategy, as this could negatively impact the company's sales and market share. Issuing additional shares of common stock would dilute the ownership interests of existing shareholders and is unlikely to be a desirable option for the company.

Jackson Plumbing,a Medium Sized Company,wants to Guarantee That It Can