________ Is a Form of Short-Term Financing

question 267

Multiple Choice

________ is a form of short-term financing. Businesses buy merchandise from their suppliers, but are not required to pay for their purchases until some future date.

• A) Secured credit
• B) Trade credit
• C) Revolving credit
• D) Factoring

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Definitions:

Interest Expense

The financial burden on an entity for using loans or credit over a certain period.

Discount Rate

The interest rate used to discount future cash flows to their present value, often used in investment appraisal.

Quick Ratio

A liquidity ratio that measures a company's ability to meet its short-term obligations with its most liquid assets, excluding inventories.

Debt-Paying Ability

A measurement or assessment of a company's capacity to meet its debt obligations with its assets or income.