Firms use short-term financing for
A)assets they expect to convert to cash in the short run.
B)assets to be used over long periods.
C)liabilities they expect to convert to cash in the short run.
D)liabilities to be used over long periods.
E)shareholders' equity they expect to convert to cash in the short run.

Question

Quizplus · Accepted Answer

Short-term financing is used for assets that a firm expects to convert to cash in the short run. This can include inventory or accounts receivable, which will likely be sold or collected within a few months. By financing these assets with short-term debt, firms can avoid tying up long-term resources in assets that will be liquidated quickly.

Firms Use Short-Term Financing for