A Firm That Follows a Relaxed Strategy Toward the Total

question 1

Multiple Choice

A firm that follows a relaxed strategy toward the total capital requirement will be a:

• A) short-term borrower.
• B) short-term lender.
• C) long-term lender.
• D) long-term borrower.

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Definitions:

Straight-line Depreciation

A method of allocating the cost of a tangible asset over its useful life in equal annual amounts, representing the asset’s decrease in value over time.

Factory Equipment

Fixed assets used in manufacturing processes, such as machinery and tools, necessary for producing goods.

Variable Cost

Outlays that are tied to the level of output or sales, including expenditures on materials and labor.

Cotton

A natural fiber harvested from the cotton plant, widely used in the textile industry for fabric production.