The Risk to the Firm of Borrowing Using Short-Term Credit

question 28

True/False

The risk to the firm of borrowing using short-term credit is usually greater than if it used long-term debt.Added risk stems from (1)the greater variability of interest costs on short-term than long-term debt and (2)the fact that even if its long-term prospects are good,the firm's lenders may not be willing to renew short-term loans if the firm is temporarily unable to repay those loans.

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Definitions:

Direct-Mail Marketer

A marketing professional or company that specializes in sending promotional materials directly to potential customers through postal or electronic mail.

Quick-Response Retailer

Retailers that use efficient supply chains and data analysis to quickly adjust to market trends and consumer demands.

Home Delivery Retailer

A business that sells products directly to customers and delivers them to their homes.

Online Shopping

The act of purchasing goods or services over the internet, involving the search, selection, and payment of products via electronic platforms.