Short Term Working Capital B11-13b

Identify some advantages and disadvantages of inventory as security for loans.

  1. Advantages:
    • Provides cash for general use; compensating balances are not required; commonly available; flexible.
  2. Disadvantages:
    • Cost may be greater than other forms of financing.
    • Requires repayment in the short-term.
    • Pledged inventory may not be available when required.
    • Not available for certain inventories.
February 23, 2019 | |