Assertion: Rohan took credit in the form of advance payment from a buy...
The assertion and reason given in the statement are true. If Rohan took credit in the form of an advance payment from a buyer and delivered the goods on time, it shows that he was able to effectively manage the credit and turn it into a profit. The reason provided, that "credit can never push a debt trap", supports the assertion that Rohan was better off in this situation as he was able to use credit to his advantage rather than fall into a debt trap.
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Assertion: Rohan took credit in the form of advance payment from a buy...
Benefits of taking credit:
Taking credit can be beneficial for businesses in various ways, including helping them meet their working capital needs, expanding their operations, and improving cash flow.
Improved cash flow:
By taking credit in the form of advance payment from a buyer, Rohan was able to improve his cash flow. This allowed him to have the necessary funds to purchase raw materials, pay his suppliers, and cover other expenses related to fulfilling the order.
Timely delivery of goods:
Having access to credit enabled Rohan to deliver the goods to the buyer on time. This not only helped him maintain a good relationship with the buyer but also build a reputation for reliability and prompt delivery.
Earning profit:
By using the advance payment to purchase the necessary materials at a lower cost, Rohan was able to increase his profit margin. This demonstrates how credit can be a tool for businesses to enhance their profitability.
Avoiding debt trap:
Contrary to popular belief, taking credit does not necessarily lead to a debt trap. When used wisely and managed effectively, credit can actually help businesses grow and thrive. In Rohan's case, taking credit in the form of advance payment from the buyer allowed him to fulfill the order, earn profit, and strengthen his business without falling into a debt trap.
In conclusion, taking credit in the form of advance payment benefited Rohan by improving his cash flow, enabling timely delivery of goods, increasing his profitability, and avoiding a debt trap. This highlights the importance of using credit strategically to achieve business goals and success.
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