Pledges of Accounts Receivable Are Never Made on a Notification

question 3

True/False

Pledges of accounts receivable are never made on a notification basis because the lender does not trust the borrower to collect the pledged account receivable and remit these payments as they are received.

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Definitions:

Sales Revenues

The total amount generated from selling goods or services before any expenses are subtracted.

Cash Operating Costs

The expenses a company incurs during its normal business operations that require cash payments, such as rent, utilities, and payroll.

Annual Depreciation

The portion of the cost of a fixed asset that is allocated as an expense in each accounting period during its useful life.

Simple Rate of Return

A financial metric used to evaluate the profitability of an investment, calculated as the annual incremental net operating income divided by the initial investment cost.