Which of the Following Statements Is CORRECT

question 108

Multiple Choice

Which of the following statements is CORRECT?

• A) a conservative financing policy is one where the firm finances part of its fixed assets with short-term capital and all of its net working capital with short-term funds.
• B) if a company receives trade credit under terms of 2/10 net 30, this implies that the company has 10 days of free trade credit.
• C) one cannot tell if a firm uses a current asset financing policy that matches maturities, is conservative, or is aggressive without an examination of its cash budget.
• D) if a firm has a relatively aggressive current asset financing policy vis-á-vis other firms in its industry, then its current ratio will probably be relatively high.
• E) accruals are an expensive but commonly used way to finance working capital.

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Definitions:

Nerve Tissue

A type of biological tissue that is responsible for communication within the body through electrical and chemical signals.

Cerebral Hemisphere

One of the two symmetrical halves of the brain, each responsible for controlling the opposite side of the body and specialized in different functions.

Speech

The expression of thoughts and feelings by articulate sounds, typically using language that is understood by others.

Spinal Cord

The long, thin, tubular structure made up of nervous tissue, which extends from the brainstem down the back, and is enclosed in and protected by the bony vertebral column. It functions primarily in transmitting neural signals between the brain and the rest of the body.