Short-Term Notes Payable

question 33

Multiple Choice

Short-term notes payable:

• A)have terms between six months and a year.
• B)are the current portion of a long-term note.
• C)may carry either implicit or explicit interest rates.
• D)are not due within one year.

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Definitions:

Return on Assets

A profitability ratio that measures how efficiently a company is using its assets to generate earnings.

Return on Debt

A measurement of a company's effectiveness in generating earnings from its debt, showing how well a company uses borrowed funds.

Cost of Equity

The return that investors expect for providing capital to a company, effectively the compensation for the risk of investing in the company.

Debt-Equity Ratio

An indicator of a business's financial risk, computed by dividing the total amount of its liabilities by the equity owned by shareholders.