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:

Government Spending

Expenditures made by the government for the purchase of goods and services, infrastructure, and transfer payments.

Money Supply

The total amount of monetary assets available in an economy at a specific time, including cash, bank deposits, and other liquid assets.

Employment Act of 1946

A landmark US legislation aimed at promoting maximum employment, production, and purchasing power, marking a commitment by the federal government to ensure economic stability.

Full Employment

A situation in an economy where all available labor resources are being used in the most efficient way possible.