The Process of Using Accounts Receivable as Security for a Loan

question 115

True/False

The process of using accounts receivable as security for a loan is called factoring.

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Definitions:

Net Present Value

The difference between the current value of cash inflows and the current value of cash outflows over a period of time.

Dividend Policy

The policy a company uses to decide how much it will pay out to shareholders in dividends. It involves whether to distribute profits to shareholders or reinvest them in the business.

Residual Dividend

A policy where dividends are paid to shareholders from the leftover or "residual" profits after all operational and capital expenditures are met.