Asked by Melina Collins on Jun 05, 2024
Verified
Which of the following is TRUE of trade credit?
A) A company can borrow any amount of funds without restrictions.
B) Its availability is restricted to large corporations.
C) The rate of interest is relatively higher for trade credit.
D) It is free of cost if suppliers do not offer a cash discount.
Trade Credit
A financial arrangement where a buyer is allowed to purchase goods or services and pay for them at a later date.
Rate of Interest
The percentage of a loan amount charged for borrowing money, expressed as an annual percentage of the principal.
Cash Discount
A reduction in the price paid for goods or services if payment is made in cash or within a certain time period.
- Understand the characteristics and implications of various sources of corporate finance, including trade credit and debt financing.
Verified Answer
Learning Objectives
- Understand the characteristics and implications of various sources of corporate finance, including trade credit and debt financing.
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