POINTS TO REMEMBER
  1. What are the different forms of short-term funds to finance the current assets?
    • Spontaneous funds known as trade credit. They emerge when a firm buys raw material on credit terms.
    • Negotiated funds that take the form of short-term loans either from banks or from other sources.
  2. Why do firms prefer trade credit?
    • It is easily available.
    • It is highly flexible.
    • It carries fewer restrictions.
  3. Can the payment be stretched beyond the due date?
    • It can be if the present value of payment is lower than in the case of no stretch.
  4. What are the different forms of bank finances?
    • Overdraft
    • Cash credit
    • Purchase/discounting of bills
    • Letter of credit
    • Working capital loan
  5. What are the different modes of security against bank loan? ...

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