Short-Term Business Financing
Chapter Learning Objectives:
AFTER STUDYING THIS CHAPTER, YOU SHOULD BE ABLE TO . . .
- Identify and describe strategies for financing working capital.
- Identify and briefly explain the factors that affect short-term financing requirements.
- Identify the types of unsecured loans made by commercial banks to business borrowers.
- Describe the use of accounts receivable, inventory, and other sources of security for bank loans.
- Explain the characteristics, terms, and costs of trade credit.
- Explain the role of commercial finance companies in providing short-term business financing.
- Briefly describe how factors function as a source of short-term business financing.
- Describe how the Small Business Administration aids businesses in meeting short-term borrowing needs.
- Describe how and why commercial paper is used as a source of short-term financing by large corporations.
Where We Have Been...
The balance sheet identity is the following: total assets equals liabilities plus stockholders' equity. In other words, a firm's assets must be financed from one or a combination of two basic sources: debt and owner's equity. Among the assets that need to be financed ...