The Sooner a Payment Is Received and the Higher the Interest

question 136

True/False

The sooner a payment is received and the higher the interest rate, the greater the present value of a future payment.

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Definitions:

Average Collection Period

The average amount of time it takes for a business to receive payments owed by its customers.

Accounts Payable

The amount a company owes to its suppliers or vendors for goods or services received but not yet paid for.

Shareholders' Equity

The residual interest in the assets of a company after deducting all its liabilities.

Net Working Capital

The difference between a company's current assets and its current liabilities, indicating the short-term liquidity of a company.