When a business wants to smooth out the timing of its monthly mismatch between cash inflows and outflows and day-to-day working capital requirements,it usually:
A) issues bank bills.
B) arranges a bank overdraft facility.
C) issues a debenture.
D) issues commercial paper.

Question

Quizplus · Accepted Answer

Arranging a bank overdraft facility is the best option for smoothing out the timing of monthly cash inflows and outflows, as it provides short-term funding to cover any temporary cash shortages. Bank bills and commercial paper are forms of short-term financing, but they may not be suitable for all businesses due to their specific requirements and costs. Issuing debentures is a form of long-term financing and would not address the immediate needs of working capital management.

When a Business Wants to Smooth Out the Timing of Its