A Firm Uses More Short-Term Sources, Its Debt Costs Are

question 28

Multiple Choice

A firm uses more short-term sources, its debt costs are low, profits are high and solvency is low with:

• A) Aggressive strategy
• B) Conservative financing strategy
• C) Moderate financing strategy
• D) Excess Liquidity strategy

---

Definitions:

Market Value

The present rate at which a good or service is available for purchase or sale in the open marketplace.

Common Stock

A form of corporate equity ownership, a type of security representing an ownership interest in a corporation.

Sale Date

The specific date on which a sale transaction is recognized in the accounting records, marking when the ownership and risks of goods pass from the seller to the buyer.

Equity Method

An accounting technique used to record investments in associate companies, where the investment is initially recognized at cost and subsequently adjusted for the investor’s share of the investee’s profit or loss.