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:

Buyer

An individual or organization that makes a purchase or expresses an intent to purchase goods or services.

Supervisor

An individual who oversees and directs the work of others, often responsible for managing employee performance, providing guidance, and ensuring tasks are completed efficiently.

Management Team

A group of individuals who oversee various aspects of a business’s operations and strategy, guiding the company towards its objectives.

Interruptions

Unexpected or unplanned for events or disturbances that impede or halt progress, especially in sales or productivity contexts.