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Which of the following best describes the advantages and risks of using trade credit for managing working capital in MSMEs?

Q: Answer-Which of the following best describes the advantages and risks of using trade credit for managing wo...

Trade credit helps MSMEs manage working capital by delaying payments to suppliers. While beneficial for short-term liquidity , excessive reliance can strain relationships and result in higher costs .

A Trade credit allows MSMEs to delay payments, improving liquidity, but overuse can strain supplier relationships and increase costs.

B Trade credit requires MSMEs to make advance payments, improving creditworthiness but adding to upfront expenses

C Trade credit is a form of equity financing where suppliers take ownership stakes in MSMEs.

D Trade credit is available only to large enterprises with established supplier relationships

E Trade credit provides immediate cash to MSMEs, secured by personal guarantees.

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Which of the following best describes the advantages and risks of using trade credit for managing working capital in MSMEs?

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