A Method of Long-Term Financing That Requires Repaying Funds with Interest

question 79

Multiple Choice

A method of long-term financing that requires repaying funds with interest is

• A) issuing bonds.
• B) using retained earnings.
• C) issuing stocks.
• D) buying insurance.
• E) using trade credit.

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Definitions:

Acid-Test Ratio

A financial metric used to determine a company's short-term liquidity position by comparing its most liquid assets (excluding inventory) to its current liabilities.

Current Ratio

A liquidity measure that assesses a company's ability to pay its short-term obligations with its short-term assets.

Account Payable

An obligation or liability of a company to pay a short-term debt to its creditors or suppliers.

Gross Margin Percentage

The proportion of sales revenue remaining after deducting cost of goods sold, expressed as a percentage of sales revenue.