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What are the merits and demerits …

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What are the merits and demerits of trade credit

Posted by Piyush Jain 5 years, 10 months ago

CBSE > Class 11 > Business Studies

1 answers

Gaurav Seth 5 years, 10 months ago

Advantages of Trade Credit:

The advantages of trade credits are:

1. It is easy and automatic source of short-term finance.

2. It reduces the capital requirement.

3. It helps the business focus on core activities.

4. It does not require any negotiation or formal agreement.

Disadvantages of Trade Credit:

Like other sources of finance, trade credit is also associated with certain disadvantages, which are as follows:

i. Trade credit is available only to those companies that have a good track record of repayment in the past.

ii. For a new business, it is very difficult to finance working capital through trade credit.

iii. It is very expensive, if payment is not made on the due date.

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Posted by Shally Sinha 4 months, 3 weeks ago

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This content has been hidden. One or more users have flagged this content as inappropriate. Once content is flagged, it is hidden from users and is reviewed by myCBSEguide team against our Community Guidelines. If content is found in violation, the user posting this content will be banned for 30 days from using Homework help section. Suspended users will receive error while adding question or answer. Question comments have also been disabled. Read community guidelines at https://mycbseguide.com/community-guidelines.html

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