When a growing company finds it needs to buy more inventory before cash has been collected from customers, they often use short term credit such as trade or notes payable to finance the inventory purchases.

Question

Quizplus · Accepted Answer

This statement is true. Companies often use short term credit such as trade or notes payable to finance inventory purchases before they have collected cash from customers. This helps them to maintain inventory levels and continue to grow their business while waiting for payments from customers.

When a Growing Company Finds It Needs to Buy More