Which statement is true regarding financing for ABC Builders seeking a major bank?

The statement regarding financing for ABC Builders that is true is that the proper type of financing will match their operating need. This is essential because different types of financing, such as short-term loans, lines of credit, and long-term loans, serve distinct purposes and align with various operational and capital needs of a business.

For instance, a construction company like ABC Builders might require short-term financing to purchase materials or manage payroll during a project, while long-term financing may be necessary for purchasing equipment or land. If the financing is matched appropriately to the specific operational needs of the business, it ensures that cash flow remains stable and expenses are manageable.

The idea of financing being only long-term or dismissing historical performance demonstrates a misunderstanding of how financing works strategically in relation to current and future business demands. Also, it is inaccurate to claim that all financing options are equally effective, as the suitability of each option can vary significantly based on the company’s situation and needs. Therefore, the focus should be on aligning financing types with specific operational requirements to ensure the effectiveness and stability of the business’s financial health.