Vitale Jewelers Obtains Needed Short-Term Funds by Selling Its Accounts

question 280

Multiple Choice

Vitale Jewelers obtains needed short-term funds by selling its accounts receivable to the Friendly Finance Company. Friendly Finance usually pays Vitale about 80% of the value of the receivables. Vitale Jewelers utilizes ________ as a means of raising short-term funds

• A) trade credit
• B) revolving credit agreements
• C) factoring
• D) receivable draft agreements

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Definitions:

Debt Ratio

A financial ratio that measures the extent of a company's or individual's leverage, calculated by dividing total liabilities by total assets.

Rational Individual

Refers to a person who makes choices that maximize their personal benefit or utility, based on their own preferences and available information.

Charity

An act of giving help, typically in the form of money or goods, to those in need.

Predicts Well

"Predicts well" refers to the accuracy and reliability with which a model or method can forecast future events or outcomes based on current or past data.