Factoring Refers To

question 2

Multiple Choice

Factoring refers to:

• A)determining the aging schedule of the firm's trade receivables.
• B)the sale of a firm's trade receivables to a financial institution.
• C)the determination of the average collection period.
• D)scoring a customer based on the 5 C's of credit.
• E)All of the above.

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Definitions:

Equity Financing

A method of raising capital for a company through the sale of shares in the company, thus giving shareholders ownership interests.

Sustainable Growth Rate

The maximum rate at which a company can grow its revenues and profits without increasing financial leverage or external equity.

Retention Ratio

The share of net income not disbursed as dividends to shareholders but rather reserved by the business for various uses.

Dividend Payout Ratio

The fraction of net income a firm pays to its shareholders in the form of dividends, compared to the portion reinvested in the business.