Which of the Following Statements Is True of Debt Loans

question 103

Multiple Choice

Which of the following statements is true of debt loans?

• A) Management has the discretion in paying the amount to investors.
• B) Debt loans should be repaid at regular intervals.
• C) Returns from debt loans are variable in nature.
• D) Corporations need not pay back the debt loans if they incur losses.

---

Definitions:

Current Ratio

A measure used to evaluate a company’s liquidity and short-term debt-paying ability; computed by dividing current assets by current liabilities.

Vertical Analysis

A financial statement analysis method where each entry for each category is listed as a percentage of a base figure within the statement.

Horizontal Analysis

A financial analysis technique that compares line items in financial statements over different periods to identify trends.

Horizontal Analysis

Horizontal analysis is a financial analysis technique that compares historical financial data over a series of periods.