Factoring Refers To

question 7

Multiple Choice

Factoring refers to:

• A) determining the aging schedule of the firm's accounts receivable.
• B) the sale of a firm's accounts receivable to a financial institution.
• C) the determination of the average collection period.
• D) scoring a customer based on the 5 C's of credit.

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Definitions:

Short-term Note

A financial instrument typically due for repayment within one year, often used for short-term financing needs.

Long-term Debt

Refers to loans or other forms of financial obligations that are due for repayment beyond the next year or operating cycle.

Assets Financed

The acquisition of assets (e.g., equipment, property) using debt or other financial instruments rather than direct payment.

Debt To Equity Ratio

A financial ratio indicating the relative proportion of shareholder's equity and debt used to finance a company's assets.