PRC-3 · Chapter 4 · Question 2 of 65
A retail business takes a loan to cover its inventory purchases for the upcoming holiday season and plans to repay it within six months. How is this type of financing classified?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Short-term financing
Explanation
Finances that are intended to be paid off within one year, such as covering seasonal inventory, are classified as short-term financing.
More Sources of Business Finance MCQs
- Q4When a company is choosing between issuing new shares (equity) or taking a bank loan (debt), what is a major financial advantage of…
- Q5At the end of the year, Delta Corp decides to keep 40% of its net profit to fund a new factory rather than paying it out to investors…
- Q6A startup tech company issues new shares to a group of investors to raise capital. What is a potential drawback of this equity financing…
- Q7A textile firm has Rs. 1 million in unpaid customer invoices but needs cash immediately to pay salaries. The firm sells these invoices to…
- Q8To fund a multi-year infrastructure project, a public limited company issues certificates to the public promising to pay a fixed interest…