Which One of These Is Frequently Cited as an Appropriate

question 62

Multiple Choice

Which one of these is frequently cited as an appropriate upper limit to the credit period offered by a seller?

• A) The buyer's inventory period
• B) The seller's inventory period
• C) The seller's operating cycle
• D) The buyer's operating cycle
• E) The buyer's receivables period

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Definitions:

Preferred Stock

A class of stock issued by a corporation that bears preference rights, such as a preference to dividends before common stockholders.

Financing Activities

Transactions and events that affect long-term liabilities and equity of a company, such as issuing shares or taking loans.

Investing Activities

Refers to the acquisition and disposition of long-term assets and other investments not included in cash equivalents.

Free Cash Flow

The amount of operating cash flow available to a company after it purchases the property, plant, and equipment necessary to maintain its current operations, computed as cash flows from operating activities less cash used to purchase property, plant, and equipment.