Tinix is a well-established petrochemical company that holds excellent credit ratings in the market. It provides short-term financial capital to other big firms by issuing promissory notes that are collateralized by physical assets. Which of the following short-term financing options is being offered by Tinix in the given scenario?
A)Factoring
B)Asset-backed commercial paper
C)Trade credit
D)Line of credit

Question

Quizplus · Accepted Answer

Tinix is offering asset-backed commercial paper, which involves issuing promissory notes that are collateralized by physical assets. This is different from factoring, which involves selling accounts receivable for immediate cash, trade credit, which involves delaying payment for purchased goods, and a line of credit, which is a revolving credit facility that can be drawn upon as needed.

Tinix Is a Well-Established Petrochemical Company That Holds Excellent Credit