The Tanning Parlor is in the middle of the busy season. Owner Sunny Bright has hired extra help and encountered some unexpected repairs that have left her short of operating capital. What type of financing would Sunny most likely use in this situation?
A)A line of credit
B)Floor planning
C)A discounted installment contract
D)Trade credit

Question

Quizplus · Accepted Answer

A line of credit would allow Sunny to borrow funds as needed during the busy season to cover unexpected expenses or shortfalls in operating capital. This type of financing is flexible and can be used for a variety of purposes. Floor planning typically applies to businesses that sell goods on credit, and discounted installment contracts involve selling goods on credit with a discount given for early payment. Trade credit is a type of financing where a supplier allows a customer to purchase goods and pay for them at a later date, but this does not address Sunny's need for additional operating capital.

The Tanning Parlor Is in the Middle of the Busy