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:

Loyalty

The quality of being faithful to commitments or obligations, often used to describe customer behavior and the likelihood of continued patronage or support.

Strategic Fit

The alignment between an organization's strategic goals and the resources and capabilities at its disposal to achieve them.

Target Market

A specific group of consumers at which a product or service is aimed, characterized by shared demographic or psychographic traits.

Success

The achievement of a goal or target, often measured by specific criteria or standards, such as profit, recognition, or accomplishment of personal or professional objectives.