Chapter

16.3. Obtaining Short-Term Financing*

From IntroductionToBusiness OP 8D04gAa

Concepts

1. How does the inventory turnover ratio affect working capital and customer satisfaction?

   "Turnover ratios. This ratio shows how quickly inventory moves through the firm and is turned into sales. If the inventory number is too high, it will typically affect the amount of working capital a

2. Why do firms make long-term capital expenditures?

   "7 Long-Term Expenditures A firm also invests funds in physical assets such as land, buildings, machinery, equipment, and information systems. These are called capital expenditures . Unlike operating

3. What are the main sources and uses of short-term financing?

   "16.3 Obtaining Short-Term Financing 3. What are the main sources and costs of unsecured and secured short-term financing? How do firms raise the funding they need? They borrow money (debt), sell owne

4. What are the main types of unsecured short-term loans?

   "Unsecured Short-Term Loans Unsecured loans are made on the basis of the firm’s creditworthiness and the lender’s previous experience with the firm. An unsecured borrower does not have to pledge speci

5. How do secured short-term loans and factoring work?

   "Secured Short-Term Loans Secured loans require the borrower to pledge specific assets as collateral, or security. The secured lender can legally take the collateral if the borrower doesn’t repay the