Kapoor Rice mills, needs funds for meeting its day to day expenses like wages, rent, electricity bill, etc. The business decides to approach its supplier deepakWadhwa and Sons. It requests Surajlal and Sons to grant them credit for purchase of goods and services. This would enablethem to buy raw materials without making immediate payment. Kapoor Rice Mill’s financial position is not very strong and hence it is not enjoying good reputation. Their past record of payments to lenders is also not convincing.
(a) Identify and explain the source of finance discussed in the above case.
(b) State its any two features.
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I don't know sorry bro ok
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(a) Trade credit.
Kapoor Rice Mill is trying to get trade credit for their business. Trade credit is a type of credit given by the trader to the buyer when purchasing goods and services. Trade credit is allowed so that if the buyer is unable to make the payment for the goods or services he bought right that moment, he is given a credit period to make payment and he can take the goods with him.
(b) Features of Trade credit:
1) Trade credit is a private agreement between the buyer and seller to pay the credit amount on a later scheduled date.
2) Trade credit is only given to companies that have a good reputation at making payments.
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