Long-term financing should be used to do which of the following?
A) pay for speculative production
B) purchase inventory for resale
C) pay salaries
D) pay utilities
E) develop new products

Question

Quizplus · Accepted Answer

Long-term financing is typically used for investments that have a longer payback period, such as developing new products. Using long-term financing to fund speculative production or purchase inventory for resale may result in a mismatch of cash flows and would be better suited for short-term financing. Paying for salaries and utilities can typically be covered by operating cash flows and would not require long-term financing.

Long-Term Financing Should Be Used to Do Which of the Following