A Company Seeks a One-Time Loan on 75% of the Face

question 16

Multiple Choice

A company seeks a one-time loan on 75% of the face value of its accounts receivable outstanding and must pay within 60 or 90 days regardless of whether it has collected its receivables. What type of financing is the company seeking?

• A) Accounts receivable factoring.
• B) Receivables discounting.
• C) A credit note.
• D) Working capital monetization.
• E) Monetizing receivables.

Understand working capital management and its significance.

Learn about the primary and secondary financial markets.

Comprehend the concept and impact of regulatory dialectic on financial institutions and corporations.

Understand the structure and significance of the TSX within the global financial market.

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Definitions:

Control Activity Over Cash

Procedures and policies implemented by a company to manage and monitor cash transactions and balances to prevent fraud and errors.

Pre-Signed Blank Cheques

A risky financial practice that involves signing a cheque before the amount payable is entered, leaving it vulnerable to fraud or misuse.

Limited Access

A situation or condition where access or entry is restricted or controlled, often referring to restricted data or locations.

Segregation Of Duties

A risk management and internal control principle that divides responsibilities among different people to reduce the risk of error or fraud.