Question

Which of the following is/are the purposes of short term finance?

• A. It facilitates the smooth running of business operations by meeting day to day financial requirements.
• B. It enables firms to hold stock of raw materials and finished product.
• C. To increase the volume of production at a short notice.
• D. All of the above

Answer 1

The correct option is D All of the above

The short-term financial needs of the companies are generally met from the following sources:

1. Trade Credit.
2. Consumer Credit.
3. Installment Credit.
4. Account Receivable Financing.
5. Bank Credit

Importance of short term finance.
Other Source businesses depend on short-term finance to continue operations through economic downturns. Without short-term financing, new businesses might never be launched, or growth and expansion might be compromised. Businesses might rely on access to short-term capital in order to obtain equipment, although in certain similar instances long-term financing might apply instead. Short-term loans also facilitate international trade and support commerce between nations.