Tiny Timber Tree Farms Applied to United Bank for a Business

question 10

Multiple Choice

Tiny Timber Tree Farms applied to United Bank for a business loan. Which financial statements would the loan officer of the bank be most likely to request?

• A) journals, ledgers, and trial balances
• B) the prospectus, statement of retained earnings, and total liability statement
• C) total debits and total credits
• D) balance sheets, income statements, and cash flow statements

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Definitions:

Average Collection Period

A measure of how long it takes a firm to convert a credit sale (internal store credit, not credit card sales) into a usable form (cash).

Quick Ratio

A financial metric that measures a company's ability to cover its short-term liabilities with its most liquid assets, excluding inventories.

Goods Sold

Goods sold refers to the products that a company has provided to customers in exchange for payment; it is often used in the context of calculating revenues and inventory turnover.

Current Ratio

This is a liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year.