Seasonal working capital needs are best financed by:
A)short-term loans.
B)sales of long-term debt.
C)forgoing dividend payments.
D)selling inventories.

Question

Quizplus · Accepted Answer

Seasonal working capital needs are short-term in nature, and therefore, the best way to finance these needs is through short-term loans. Short-term loans can be easily repaid once the seasonal peak is over, and help avoid the burden of long-term debt or the loss of funds from foregoing dividend payments. Selling inventories may not always be a feasible option, especially if the inventory is essential for the business operations.

Seasonal Working Capital Needs Are Best Financed By