Cash flows from operations may not be sufficient for a firm to keep up with growth$-$related financing needs, or the firm may not be able to a generate enough cash flow to maintain a surplus of cash. Firms prefer to borrow now to fulfill their capital requirements through means of st financing or long$-$term financing. Both methods have their advantages and disadvantages.

The following statement identifies a possible characteristic of short$-$term financing.

Consider this case:

Short$-$term credit agreements are more restrictive than long$-$term credit agreements.

Identify whether the preceding statement is true or false.

This statement is false.

This statement is true.