The Potential Disadvantages of Extending Credit Include All of the Following

question 22

Multiple Choice

The potential disadvantages of extending credit include all of the following except which one?

• A)Increased borrowing costs.
• B)Customers buy too much.
• C)The need for a collections department.
• D)More staff hours spent in the accounting department.

---

Definitions:

Capital Structure

The mix of a company's long-term debt, specific short-term debt, common equity, and preferred equity used to finance its overall operations and growth.

Nature of Assets

The inherent characteristics that define the resources owned by a business, potentially providing economic value or benefit in the future.

Optimal Level

The most efficient, effective, or desirable amount or degree of something.

Financial Leverage

The use of borrowed money (debt) to amplify the potential return on investment.