Which of the Following Statements Is CORRECT

question 118

Multiple Choice

Which of the following statements is CORRECT?

• A) A conservative financing policy is one where the firm finances part of its fixed assets with short-term capital and all of its net working capital with short-term funds.
• B) If a company receives trade credit under terms of 2/10 net 30, this implies that the company has 10 days of free trade credit.
• C) One cannot tell if a firm uses a current asset financing policy that matches maturities, is conservative, or is aggressive without an examination of its cash budget.
• D) If a firm has a relatively aggressive current asset financing policy vis-á-vis other firms in its industry, then its current ratio will probably be relatively high.
• E) Accruals are an expensive but commonly used way to finance working capital.

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Definitions:

Labor Market

The supply and demand for labor, where employers seek to hire employees and employees seek jobs, and wages are determined.

Income-Maintenance Programs

Government programs designed to provide financial assistance to individuals or households to ensure a minimum level of income.

Aggregate Spending

The total amount of spending in an economy, including consumption, investment, government purchases, and net exports.

Medicare

In the United States, a national health coverage scheme available to individuals over 65, younger persons with specific disabilities, and those suffering from End-Stage Renal Disease.