Exam 16: Short-Term Business Financing

If net working capital is negative, current assets are partially financed by the firm's long-term debt.

Grain would be a type of inventory for which a blanket inventory lien would be used.

Commercial banks lend unsecured short-term funds in the following three basic ways:

The Small Business Administration:

Which of the following is not true regarding pledging accounts receivable?

The need for current funds increases when there is an upswing in the business cycle or the sales cycle of an industry.

For bank loans, the effective cost is generally

Which of the following are typical financing strategies used by businesses?

Current assets less current liabilities.

The most important form of short-term business financing is:

A business that needs short-term credit in excess of its regular line of bank credit may:

For most lines of business the basic source of short-term loan financing is:

Inventory loans are less expensive than unsecured loans to business borrowers.

Short-term financing may come in the form of trade credit extended between businesses.

The prime rate offered by commercial banks is their _____________ rate to their ______________ quality business customers.

In order to borrow $175,000 for an 8% loan on discount basis, the firm will actually have to borrow:

A short-term promissory note sold by high-credit-quality corporations and is backed solely by the credit quality of the issuer is called:

Factoring accounts receivable has all of the following characteristics except:

Pledging accounts receivable has all of the following characteristics except:

Trade credit is the single most important form of short-term business financing.