No one source (or combination of sources) of short-term financing is necessarily optimal for all firms.
Many other factors, in addition to the cost of financing, need to be considered when choosing the optimal source or sources of short-term financing. Some of these factors include the availability of funds during periods of financial crisis or tight money, restrictive covenants imposed on the firm, and the nature of the firm’s operations and funds requirements. The advantages and disadvantages of the various sources of short-term credit are summarized in Table 16.8. LO1