Which One of the Following Is Least Likely to Be

question 32

Multiple Choice

Which one of the following is least likely to be correct for a firm that repeatedly stretches its payables?

• A) The firm may receive more favorable status from suppliers.
• B) The firm may reduce its explicit short-term interest expense.
• C) The cost of forgone discounts may exceed the cost of bank credit.
• D) The firm may be labeled as a credit risk.

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Definitions:

Non-controlling Interest Proportion

The share of equity interest in a subsidiary not owned by the parent company, expressed as a percentage of total equity.

Equity Balance

The amount of owners' equity in a company, reflecting the residual interest in the assets of the entity after deducting liabilities.

Dividend Payment Capacity

The ability of a company to make dividend payments to its shareholders, often assessed by its free cash flow or earnings.

Non-controlling Interest

A minority share of ownership in a subsidiary that is not owned by the parent company, reflected in consolidated financial statements to show the portion of the subsidiary's earnings not attributed to the parent.