Question

Trade credit as a source of funds has certain limitations, which is/are ______________________.

• A. Only limited amount of funds can be generated through trade credit.
• B. It is generally a costly source of funds.
• C. Availability of easy and flexible trade credit facilities may induce a firm to indulge in over-trading.
• D. All of the above

Answer 1

The correct option is D All of the above

Trade credit is issued when goods and services are traded on credit. It is offered by one seller to the other.a) Trade credit as a source of funds has certain limitations, which are:b) limited amount of funds can be generated through trade credit.

c) It is generally a costly source of funds.

Availability of easy and flexible trade credit facilities may induce a firm to indulge in over-trading.