It is not wise to use commercial paper or trade credit to finance plant and equipment.

Question

It is not wise to use commercial paper or trade credit to finance plant and equipment.​

Quizplus · Accepted Answer

Commercial paper and trade credit are usually used for short-term financing needs, whereas plant and equipment are long-term assets. It is more appropriate to use long-term financing options such as bonds or loans to finance plant and equipment. Using short-term financing for long-term assets can create cash flow and liquidity issues in the future.

It Is Not Wise to Use Commercial Paper or Trade