Multiple choice

Short term sources of funds can be utilized for long term applications.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Explanation: When we source funds on a short term basis i.e, generally current liabilities repayable in one year the application or use of funds should be within the period. Any application beyond the period will block the funds and we fail to repay the current obligation. The image of the company gets tarnished and there would be no chances of recovery. The same thing has happened in South Asia Crisis of 1997. Countries and companies are treated on the same footing

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