Question
Why is trade credit from suppliers considered an advantage in a buyout?
It inflates the company's value
It improves customer service
It eases early-stage financial pressure on the buyer
It complicates cash flow management
It inflates the company's value
It improves customer service
It eases early-stage financial pressure on the buyer
It complicates cash flow management
Answers
GPT-4o mini
Trade credit from suppliers is considered an advantage in a buyout primarily because **it eases early-stage financial pressure on the buyer**. This type of credit allows the buyer to receive goods or services without having to pay for them immediately, thereby helping to manage cash flow during the initial phases of the acquisition. It can provide the new owner with the flexibility to invest in the business, manage operational costs, and bolster working capital without immediately impacting cash reserves.