Short-term loans are generally used to:
A)finance permanent additions to working capital.
B)finance additions to fixed assets.
C)finance seasonal working-capital requirements.
D)retire equity, thus changing a firm's capital structure.

Question

Quizplus · Accepted Answer

Short-term loans are typically used to finance seasonal working-capital requirements, such as purchasing inventory to meet demand during peak sales periods. They are not typically used for financing permanent additions to working capital or fixed assets, and do not involve retiring equity to change a firm's capital structure.

Short-Term Loans Are Generally Used To