Question

Duk Yu, a beverage company, buys its raw materials from Nessange, a fruits and vegetables exporting company, without making any payment at the time of purchase. Instead, Nessange allows Duk Yu to pay the total purchase amount within a period of six months. Which of the following short-term financing options is being used by Duk Yu in the given scenario?

A. Trade credit
B. Factoring
C. Short-term bank loans
D. Commercial paper

Answer 1

Answer:

Trade credit

Explanation:

Trade credit is a financial tool which buyer is allowed by supplier to buy now and pay later. Payment date is pre-decided. It is generally used for financing on short term basis.