Reitmans is a Canadian company that specializes in the sale of women€™s wear at retail. Exhibits 9-3A to C contain three notes from the company€™s 2014 annual report. All figures are expressed in thousands of dollars.

Required:
a. Refer to Exhibit 9-3A. Explain why Reitmans uses letters of credit and how the working capital loan relates to them.
b. Refer to Exhibit 9-3B. If Reitman€™s costs of goods sold for the year ending February 1, 2014, was $377,913, thousand and the company began the year with $93,317 thousand in inventory and ended with $109,601 thousand, calculate the accounts payable turnover ratio and average payment period.
c. Refer to Exhibit 9-3C and explain in your own words how Reitmans accounts for deferred revenue.

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EXCERPT FROM REİTMANS' 2014 ANNUAL REPORT, MANAGEMENT DISCUSSION AND ANALYSIS EXHIBIT 9-3A The Company has unsecured borrowing and working capital credit facilities available up to an amount of $125,000 or its U.S. dollar equivalent. As at February 1, 2014, S30,270 February 2, 2013-$46,792) of the operating lines of credit were committed for documentary and standby letters of credit. These credit facilities are used principally for US. dollar let ters of credit to satisfy international third-party vendors which require such backing before confirming purchase orders issued by the Company and to support U.S. dollar foreign exchange forward contract purchases. The Company rarely uses such credit facilities for other purposes The Company has granted inevocable standby letters of credit, issued by highly-rated financial institutions, to third par ties to indemnify them in the event the Company does not perform its contractual obligations. As at February 1, 2014 the maximum potential liability under these guarantees was $5,019 (February 2, 2013 $5,014). The standby letters of credit mature at various dates during fiscal 2015. The Company has recorded no liability with respect to these guaran tees, as the Company does not expect to make any payments for these items EXCERPT FROM REITMANS' 2014 ANNUAL REPORT, NOTE 12 12 Trade and other payables February 1, 2014 $ 49,593 February 2, 2013 Trade payables Non-trade payables due to related parties Other non-trade payables Personnel liabilities Payables relating to premises Provision for sales returns 10,878 25,566 15,777 707 102,576 11,842 $ 90,734 $41,494 74 319 24,443 13,489 756 80,575 11,425 $69,150 Less non-current portion The non-current portion of trade and other payables, which is included in payables relating to premises, repreeents the portion of defered rent to be amortized and other payables beyond the next twelve months. 9-3C EXCERPT FROM REITMANS' 2014 ANNUAL REPORT, NOTE 3(0) O) REVENUE Revenue is recognized from the sale of merchandise when a customer purchases and takes delivery of the merchan dise. Reported sales are net of returns and estimated possible retums and exclude sales taxes Gift cards sold are recorded as deferred revenue and revenue is recognized when the gift cards are redeemed.An estimate s made of gift cards not expected to be redeemed based on the terms of the gift cards and historical redemption pattems Loyalty points and awards granted under customer loyalty programs are recognized as a separate component of revenue, and are deferred at the date of initial sale. Revenue is recognized when the loyalty points and awards are redeemed and the Company has fulfilled its obligation. The amount of revenue deferred is measured based on the fair value of loyalty points and awards granted, taking into consideration the estimated redemption percentage.