Akram owns a small farm. He employs 80 workers in the field and has recently hired a manager to help him manage the farm. The in

Question

10 days ago

7

Akram owns a small farm. He employs 80 workers in the field and has recently hired a manager to help him manage the farm. The in

come of the business varies greatly during the year. The farm makes a small profit but Akram is ambitious. He wants to take over a neighbour’s farm and increase the range of crops he sells. He thinks that he needs long-term finance and plans to take out bank loan to pay for the takeover. He has already borrowed money to buy a new tractor. A friend has advised him to form a company and sell shares

Business

1 answer:

Scilla [3.2K] · Answer 1 · 2026-03-26T04:23:04+03:00

Question Completion:

Task: Identify two types of short-term financing that Akram can use during low farm income

Answer:

Akram's Farm

Akram's farm can effectively utilize the following sources of short-term finance:

1. Akram's farm can leverage Accounts Payable for immediate trade finance when purchasing inputs, machinery, and supplies on credit. Accounts Payable can offer interest-free loans by allowing extended repayment periods to suppliers. However, the farm must take care not to lose out on cash discounts, which are crucial for trade finance.

2. Akram's farm can raise funds by accelerating the collection of Accounts Receivable. Additionally, he may consider obtaining short-term loans secured against the accounts receivable. The farm can also sell the accounts receivable to factoring companies to receive immediate cash.

Akram's farm is currently a small establishment that has not yet been incorporated. The primary focus is on expanding operations and initiating steps to change its corporate structure to access the financial resources available to businesses.