Represents spontaneous financing

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Reference no: EM132018375

1. Which of the following represents spontaneous financing?

a. the origination of a 9-month bank loan

b. the issuance of a note payable with a maturity of less than one year

c. an increase accounts payable resulting from the purchase of inventories on 30-day credit

d. a and c

e. all of the above

2. Why will banks extend short-term working capital financing to companies to which they would not extend long-term credit.

a. Conditions are unlikely to deteriorate too badly in the short term.

b. Working capital loans are "self liquidating."

c. The working capital itself can be used to collateralize the loan.

d. All of the above.

Reference no: EM132018375

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