Question

26.) Hina started a small sweet shop in Delhi under the name Mithai
Wala. Over the year, her business grew manifold by the word of
month. Recently she procured a big export order. Although the
exporter has promised to make some advance payments, but Hina
will still need some more funds to meet the working capital
requirement.
I. Suggest any two source through which Hina can raise funds to meet
working capital requirement.
II. Give two features of each of suggested source.​

Answer 1

Answer:

1. Trade Credit

2. Loan from commercial Banks

Answer 2

The sources of funds that can be used are short-term.

• Since Hina has secured an export order in order to meet it she will need the help of various short/long term funds.

1. The sources through which Hina can raise funds are -

• Loans from the bank.
• Trade credit.

2. Features of trade credit -

1. It is a source of funding that arises quickly. Thus, Hina can get immediate funds.
2. There are no official debt acknowledgments or legal mechanisms.

• Features of loans -

1. There is felixibility.
2. They have low rate of interest, thereby making the return easy.