Short-term self-liquidating loans are intended to
A) finance capital assets.
B) cover seasonal peaks in financing caused by inventory and receivable buildups.
C) finance merger/acquisition activity.
D) recapitalize the firm.

Question

Quizplus · Accepted Answer

Short-term self-liquidating loans are intended to cover seasonal peaks in financing caused by inventory and receivable buildups. These loans are typically used to finance working capital needs and are expected to be repaid with the proceeds from the sale of the financed items. They are not intended for financing capital assets, merger/acquisition activity, or recapitalizing the firm.

Short-Term Self-Liquidating Loans Are Intended to