The owner of Mountain Cycle Shop worries that cash flows this winter may be insufficient to meet his current operating expenses. While he anticipates a surplus of cash inflows as warm weather approaches, he needs funds now to meet his immediate obligations. He can best resolve his cash flow concerns by obtaining ________ financing

Question

Quizplus · Accepted Answer

Short-term financing is the best choice for meeting the immediate obligations of the business owner. As he expects a surplus of cash inflows with warm weather, he can repay the short-term loan quickly. Intermediate, long-term, and contingency financing would not be appropriate as they require a longer period to repay and may not provide immediate relief for his current cash flow concerns.

The Owner of Mountain Cycle Shop Worries That Cash Flows