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Which of the following is NOT a source of short‑term finance for a manufacturing firm?

easy MCQ 1 mark Class 12 · Business Studies · Financial Management
  1. Bank overdraft
  2. Commercial paper
  3. Preference shares
  4. Trade credit
Answer
Preference shares

The correct answer is Preference shares — Select the option that does not belong to short‑term finance.

Step-by-step solution

  1. Identify the typical short‑term finance sources such as bank overdraft, commercial paper and trade credit, because they are repayable within a year.
  2. Recognise that preference shares are a long‑term source as they carry a fixed dividend and are listed under long‑term capital.
  3. Select the option that does not belong to short‑term finance.
Common mistake: Confusing preference shares with debentures, which are also long‑term.

Concept tested: Short‑term sources of finance

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