A fiRm Wishes to Obtain Short Term fiNancing at a Rate

question 329

Multiple Choice

A firm wishes to obtain short term financing at a rate significantly below that which a bank would charge. If the firm is large and highly rated, it may be able to meet its needs by _______________.

• A) Obtaining an unsecured committed operating loan.
• B) Obtaining an unsecured non-committed operating loan.
• C) Factoring its receivables.
• D) Obtaining an inventory loan.
• E) Issuing bankers acceptances.

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Definitions:

Year 2

The second year in a series, timeline, or sequence, often referring to financial or operational periods.

Variable Costing

An accounting method that includes only variable manufacturing costs—direct materials, direct labor, and variable manufacturing overhead—in product costs, excluding fixed overhead.

Net Operating Income

A financial metric that calculates how much profit a business generates from its regular operational activities, excluding non-operating income and expenses.

Operating Loss

A financial situation indicating a company's expenses have surpassed its revenue from operations, resulting in a negative operating income.