COMMERCE 1E03 Final: Chapter 17 part 2
11 Apr 2017
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4 c"s of credit is a business"s credit worthiness is determined by its character, capacity, capital, and conditions. Character includes factors such as business size, location, number of years operating, structure. Capacity considers the ability of the business to pay its bills: structure of company"s debt- whether it is secured or unsecured. Capital assesses whether a company has the financial resources to repay its creditors: info is obtained from financial records. Expensive source of short-term funds is factoring which is the process of selling accounts receivable for cash. When company"s do not want to negotiate with banks they can sell commercial paper which consists of unsecured promissory notes of ,000 and up that mature in 270 days or less. It in unsecured, only financially stable firms can sell them. Credit cards provided business with ready access to money that can save time and the likely embarrassment of being rejected by a bank loan.
