Factoring Refers To

question 11

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.
• E) All of

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Definitions:

Current Liabilities

Liabilities expected to be settled within one year or within the normal operating cycle of the business, such as accounts payable and short-term loans.

Current Ratio

A measure used to determine a company's potential to fulfill obligations due within one year by calculating the ratio of its current assets to its current liabilities.

Indicator Of Liquidity

Measures that indicate how easily a company can convert its assets into cash to cover short-term obligations.

Total Obligations

The sum of a borrower's current and long-term financial responsibilities.