When a Business Wants to Smooth Out the Timing of Its

question 3

Multiple Choice

When a business wants to smooth out the timing of its monthly mismatch between cash inflows and outflows and day-to-day working capital requirements,it usually:

• A) issues bank bills.
• B) arranges a bank overdraft facility.
• C) issues a debenture.
• D) issues commercial paper.

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Definitions:

Prompt Payment Discount

A discount offered to customers for paying their bills promptly, usually within a specified time frame to encourage faster payment.

Terms of Sale

The conditions under which a seller will complete a sale, typically outlining payment terms, delivery times, and quality expectations.

Prompt Payment Discount

A discount offered by sellers to buyers for paying their invoices early.

Liable

Legally responsible or obligated.