There Is a Saying in Banking That When a Business

question 367

Multiple Choice

There is a saying in banking that when a business is experiencing financial problems, trade creditors are the first to know. Why would this be true?

• A) Trade creditors perform credit checks less often than do banks.
• B) Trade creditors get all of their information about credit risks from banks.
• C) Trade creditors can easily repossess the merchandise sold if the borrower refuses to pay.
• D) Trade credit is usually extended only to the most creditworthy of businesses, while banks will make short-term loans to almost any business.
• E) Trade credit is typically of shorter maturity, and offered more frequently, than other types of credit such as bank loans.

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Definitions:

Wavelike Pattern

A fluctuation or trend that rises and falls periodically, similar to the motion of waves.

Qualitative Forecasting Methods

Forecasting techniques that use judgment, intuition, and subjective evaluations rather than quantitative data to predict future events.

Market Intelligence

The process of gathering, analyzing, and interpreting information about a market, including its size, growth, competitive landscape, and customer needs and preferences.

Holt's Model

A forecasting technique that extends exponential smoothing to allow forecasting of data with trends by adding a trend smoothing coefficient.