Which of the Following Is an Advantage of Utilizing Short-Term

question 154

Multiple Choice

Which of the following is an advantage of utilizing short-term debt to finance the acquisition of short-term assets?

• A) Interest rates on short-term debt are usually lower than interest-rates on long-term debt.
• B) It exposes the firm to less risk than if the firm were to use long-term debt.
• C) It improves the firm's debt ratio.
• D) It increases the firm's sustainable growth rate.

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Definitions:

Controller

A senior executive responsible for the accounting operations and financial reporting of a company.

Board of Directors

A group of individuals elected by shareholders to oversee the management and make key decisions for a corporation.

Declare Dividends

Declare dividends refers to the action by a company's board of directors to distribute a portion of the earnings to shareholders, typically in the form of cash or stock.

Execute Policy

The act of implementing or carrying out a set of directives or procedures laid down by an organization or government.