Question

State any four short-term sources of finance for a joint stock company. 

Answer 1

1. Public Deposits: The company accepts deposits from the public for a short duration (usually 6 months to 3 years). It is a cheaper source of funds and involves less formalities than bank loans.
2. Trade Credits: The company gets goods and services on credit from suppliers. No immediate payment is required, so it helps manage cash flow.
3. Customer Advances: The company asks customers to pay in advance for goods or services. This provides immediate funds for working capital needs.
4. Factoring: The company sells its accounts receivable (invoices) to a factoring company. The factoring company pays the business immediate cash, usually after deducting a small fee.