A Floating Inventory Lien Is Most Attractive When the Firm

question 140

True/False

A floating inventory lien is most attractive when the firm has a stable level of inventory that consists of a diversified group of relatively inexpensive merchandise.

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Definitions:

Operating Activities

Activities that constitute the primary or main activities of an organization, including sales, supply, and production functions, often reflected in the cash flow statement.

Indirect Method

A technique used in comprehensive cash flow statements, it adjusts net income for non-cash transactions and changes in working capital to calculate net cash from operating activities.

Cash Flow Statement

A financial report that provides a summary of the cash inflows and outflows for a business over a specific period.

Marketable Securities

Financial instruments and assets that can be easily translated into cash because they have high liquidity and short maturities.