From the banker's point of view, short-term bank credit is an excellent way of financing
A) fixed assets.
B) permanent working capital needs.
C) repayment of long-term debt.
D) seasonal bulges in inventory and receivables.

Question

Quizplus · Accepted Answer

Short-term bank credit is commonly used to finance seasonal bulges in inventory and receivables because these are temporary increases in working capital needs that occur at specific times of the year. Using short-term credit for fixed assets or long-term debt repayment would be inappropriate because these are not temporary financing needs that can be quickly repaid. Permanent working capital needs typically require more stable and long-term sources of financing, rather than short-term credit.

From the Banker's Point of View, Short-Term Bank Credit Is