U2 Ltd Is Considering Whether to Offer Trade Credit to A1

question 19

Multiple Choice

U2 Ltd is considering whether to offer trade credit to A1 Ltd. The ratio from A1's accounts that will be most useful in assessing the firm's ability to repay its trade debts on time is the:

• A)gearing.
• B)asset turnover period.
• C)interest cover.
• D)average settlement period for accounts payable.

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Definitions:

Thomas Paine

A political activist and writer whose works, including "Common Sense" and "The American Crisis," were influential in the American Revolution and the promotion of democratic ideals.

Benedict Arnold

An American military officer who served during the Revolutionary War before defecting to the British side in 1780, becoming synonymous with betrayal.

American Ally

A country that is in a mutual agreement with the United States to support each other, especially in terms of defense and international policy.

Battle of Saratoga

A pivotal series of engagements in 1777 during the American Revolutionary War, which resulted in a decisive victory for the American forces and significantly boosted their morale.