Question

From the perspective of repayment source and timeframe, which of the following statements accurately distinguishes a Working Capital (W

  • C credit from a Term Loan (T
  • L ?
A A WC loan is repaid out of long-term equity issues, whereas a Term Loan is repaid via short-term invoice discounting.
B A WC loan requires a mandatory holiday period (moratorium), while a Term Loan must be recovered within one month.
C A WC loan is supposed to be repaid out of the sale proceeds of current assets within a short period, whereas a Term Loan is repaid out of cash generation from operations over a longer time span.
D A WC loan is secured only against capital machinery, whereas a Term Loan requires no primary security.
E A WC loan is cleared through institutional equity dilutions, whereas a Term Loan is cleared through short-term trade credit lines.
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