Which One of the Following Financing Methods Usually Provides a "Float

question 6

Multiple Choice

Which one of the following financing methods usually provides a "float" period?

• A)Installment loan
• B)Credit card
• C)Lump-sum loan
• D)Home equity line of credit
• E)Auto loan

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Definitions:

Acid-test Ratio

A financial metric that measures a company's ability to cover its short-term liabilities with its most liquid assets.

Debt-to-equity Ratio

This proportion demonstrates the relative use of debt and shareholders' equity in the capital funding of a company's assets.

Receivable Turnover

A financial metric indicating how efficiently a company collects cash from credit sales by measuring the number of times average accounts receivable are collected over a period.

Inventory Turnover

A ratio showing how many times a company's inventory is sold and replaced over a period, indicating efficiency in managing stock.