A manufacturing firm in Kano produces large quantities of textiles but experiences cash flow constraints during production cycles. When a merchant wholesaler places advance bulk orders and makes prompt cash payments to the firm, which primary function is being rendered directly to the producer?
- Financing production by releasing capital tied up in accumulated stockCevap
- BBreaking bulk into smaller quantities tailored to consumer purchasing habits
- CExtending credit facilities and flexible settlement terms to small-scale retailers
- DIssuing debit notes to correct undercharges on commercial invoices
Cevap
Financing production by releasing capital tied up in accumulated stock
The correct answer highlights the financial function wholesalers perform for producers. By making large bulk purchases and paying promptly, the wholesaler absorbs inventory holding costs and provides the manufacturer with immediate liquidity, thereby funding ongoing manufacturing operations.
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Wholesaler Functions to Producers vs Retailers