Delaying the Payment of Accounts Payable in Order to Improve

question 221

Multiple Choice

Delaying the payment of accounts payable in order to improve cash management is known as

• A) ruining the firm's credit rating.
• B) float.
• C) stretching the payables.
• D) reducing optimal cash requirements.

---

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 Expense

Over a span of time, the monetary burden borne by an entity due to borrowed capital.

Earning Per Share

A company's net profit divided by the number of its outstanding shares, indicating the profitability on a per-share basis.

Total Equity

The sum of all stakes in a corporation, determined by subtracting total liabilities from total assets.