The correct answer is A. 5 months.
Short-term finance is a type of financing that is used to meet short-term needs, such as covering operating expenses or inventory costs. It is typically used for a period of up to one year, but can be shorter or longer depending on the needs of the business.
There are a number of different sources of short-term finance, including bank loans, trade credit, and commercial paper. Bank loans are the most common type of short-term finance, and they can be either secured or unsecured. Secured loans are backed by collateral, such as inventory or equipment, while unsecured loans are not. Trade credit is a form of short-term financing that is extended by suppliers to their customers. Commercial paper is a short-term debt instrument that is issued by companies with good credit ratings.
Short-term finance can be a valuable tool for businesses that need to meet short-term needs. However, it is important to choose the right type of financing and to make sure that the terms of the loan are affordable.
Here is a brief explanation of each option:
- Option A: 5 months. This is the most common length of time for short-term finance. It is typically used to cover operating expenses or inventory costs.
- Option B: 10 months. This is a longer period of time for short-term finance. It is typically used to cover larger expenses, such as capital expenditures.
- Option C: 12 months. This is the longest period of time for short-term finance. It is typically used to cover seasonal fluctuations in sales.
- Option D: 15 months. This is not a common length of time for short-term finance. It is typically used to cover very large expenses, such as the purchase of a new building.