1. A loan is where cash is disbursed to suppliers and labor, inventory is sold,
ID: 2808676 • Letter: 1
Question
1. A loan is where cash is disbursed to suppliers and labor, inventory is sold, receivables are collected, and the Bank is repaid over a short but fully understood schedule. 2. A loan is repaid from cash flow over a period of time greater than one year. 3. A loan is where the Bank lends under a commitment to advance based on agreed upon conditions and where the commitment is revocable by the Bank. loan. 4. Accounts receivable and inventory are generally the collateral fora 5. A loan is generally repaid from the future occurrence of an event. 6. Mortgages on land and buildings are usually collateral for a loan. 7. A loan is generally used to purchase current assets or pay current liabilities but is never fully repaidExplanation / Answer
Since no options are provided, the suitable answer has been given.
As per rules I will answer the first 4 sub parts of the question
1: working capital loan
(A working capital loan is taken to meet the day to day operations of the business. They are used to cover the immediate liabilities and finance short term assets such as inventory and receivables.)
2: Long term loan
(Long term loans are generally taken for a period greater than 1 year and so are repaid from long term cash flows)
3: Revocable Line Of Credit
This is type of revocable loan granted by the bank based on certain conditions being fulfilled. It can be annulled at the discretion of the bank.
4: Accounts Receivable and Inventory Financing
This is a basic form of collateral financing where receivables and inventory are given to the lending institution as collateral.
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