"Stretching" Accounts Payable Is a Widely Accepted,entirely Ethical,and Costless Financing

question 91

True/False

"Stretching" accounts payable is a widely accepted,entirely ethical,and costless financing technique,which is particularly useful when suppliers' production plants are at full capacity .

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Definitions:

EBIT

Earnings Before Interest and Taxes, a measure of a firm's profit that includes all expenses except interest and income tax expenses.

Interest

The charge for borrowing money or the return on invested capital, typically expressed as an annual percentage rate.

EBITDA Coverage Ratio

A financial metric that assesses a company's ability to pay off its debts, calculated by dividing EBITDA by total debt service costs.

EBITDA

Earnings Before Interest, Taxes, Depreciation, and Amortization, a measure of a company's operating performance.