The following are possible sources of financing: Operating line of credit Commercial paper Term
Question:
The following are possible sources of financing:
• Operating line of credit
• Commercial paper
• Term loan
• Commercial mortgage
• Long-term bonds payable
• Equity financing
Consider each of the following cases:
Case A The company is a large public company with significant tangible assets, an excellent credit rating, and a need for short-term loans at low cost.
Case B The company has significant tangible assets that are all pledged as security for other loans, and the industry sector is very risky.
Case C The company’s primary assets are machinery and equipment.
Case D The company’s primary assets are accounts receivable.
Required:
For each case, suggest a logical source of financing. Explain.
Step by Step Answer:
Intermediate Accounting Volume 2
ISBN: 9781260881240
8th Edition
Authors: Thomas H. Beechy, Joan E. Conrod, Elizabeth Farrell, Ingrid McLeod-Dick, Kayla Tomulka, Romi-Lee Sevel