A source of short-term funds for many small companies with inventories is
A) trade credit.
B) long-term bank loans.
C) mortgages.
D) asset-based notes.

Question

Quizplus · Accepted Answer

Trade credit is the most common source of short-term funds for small companies with inventories. It allows businesses to purchase goods and services on credit from their suppliers and pay for them at a later date, usually within 30 to 90 days. This can help small businesses manage their cash flow and maintain inventory levels without having to obtain long-term bank loans or mortgages that may have stricter requirements and longer repayment terms. Asset-based notes can also be a source of short-term funds, but they may require collateral such as accounts receivable or inventory, which can be more difficult for small businesses to secure. Long-term bank loans and mortgages are not typically used for short-term funding needs.

A Source of Short-Term Funds for Many Small Companies with Inventories