Question

12. Sources of short-term financing Aa Aa Short-term credit, or short-term financing, is any liability that is scheduled for repayment within one year. Among the sources of short-term funds are banks, suppliers, securities firms, and insurance companies. Their securities (or obligations) can take the form of bank loans, trade credit, commercial paper, and accruals. Some types of short-term financing are easier to obtain and manage than others. Financial managers should consider the costs of the various sources of financing as part of a business's cash management strategy. The following statement refers to a source of short-term credit. Select the best term to complete the following sentence: Agreements with banks for specific amounts, interest rates, and terms are called short-term Ursu Fabricators Corporation is a manufacturing company. Ursu has been paying sales commissions to its salespeople on a quarterly basis. The vice president of sales has proposed that the policy be changed so that the sales staff is paid on a monthly basis. The company's financial managers have been asked to review the proposal. Which type of short-term financing will be affected by this policy change? Accruals Trade credit O Commercial paper O Bank loans