On what factors trade credit depends answer in 50 words
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Trade credit is the credit extended by one trader to another for the purchase of goods and services.
The extent and pattern of trade credit within an industry depend on a number of factors, including the average rate of turnover of stock, the nature of the goods involved—e.g., their perishability—the relative sizes of the buying and selling firms, and the degree of competition. If inventories of goods turn over quickly, for example, it is likely that a large amount of very short-term credit will be extended. Longer-term credit will be extended for goods with slow rates of turnover.
The extent and pattern of trade credit within an industry depend on a number of factors, including the average rate of turnover of stock, the nature of the goods involved—e.g., their perishability—the relative sizes of the buying and selling firms, and the degree of competition. If inventories of goods turn over quickly, for example, it is likely that a large amount of very short-term credit will be extended. Longer-term credit will be extended for goods with slow rates of turnover.
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