Which of the following factors might lead to a potential credit risk for lenders?

Increasing reliance on short-term financing can indicate potential credit risk for lenders due to various reasons. When a company frequently utilizes short-term financing, it may signal a lack of stable cash flow or insufficient long-term capital to fund operations and growth. This dependence can create a precarious financial situation, especially if the company faces fluctuations in revenue or unforeseen expenses, which could hinder its ability to repay loans.

Short-term financing often comes with higher interest rates or fluctuating repayment terms, which can further strain a business's finances. If a borrower is consistently relying on this type of financing, lenders might be wary, as it suggests that the company could struggle to manage its cash flow over time, ultimately risking default on loans.

In contrast, factors like strong historical cash flows, consistent sales performance, and high levels of inventory turnover generally indicate financial health and stability, which are less likely to contribute to credit risk. These aspects reflect a business's ability to generate revenue and manage assets effectively, making them positive indicators for lenders rather than risks.