Describe the different short-term borrowing options a company can use to finance its short-term needs.

Finance by Geoffrey
  1. ABC Corporation has the following sales collection policy: 15% of the sales are collected immediately. 40% of the sales are received in the first month after the sale. 20% of the sales are received in the second month after the sale. 15% of the sales are received in the third month of after the sale. 6% of the sales are received in the fourth month after the sale. The remainder are bad debts and not collected. Suppose the company has the following expected sales: Jan $50,000, Feb $60,000, March $70,000, April $45,000, May $66,000. Determine the cash collections for May.
  1. ABC Corporation has the following sales collection policy: 25% of the sales are received in the same month, 50% of the sales are received in the first month after the sale. 20% of the sales are received in the second month after the sale. The remainder are received in the third month after the sale. Suppose the company has the following expected sales: Jan $50,000, Feb $60,000, March $70,000, April $45,000, May $66,000. Determine the cash collections for May.
  2. Describe the different short-term borrowing options a company can use to finance its short-term needs.