The Draft That Allows a Period of 120 Days to Pay

question 23

True/False

The draft that allows a period of 120 days to pay is very attractive for the importer because it allows time for the importer to sell the goods before having to pay for them.

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Definitions:

Accounts Receivable Turnover

A financial ratio that measures how efficiently a company collects revenue from its credit sales by comparing net credit sales with the average accounts receivable.

Acid-Test Ratio

A financial metric that measures a company's ability to pay off its current liabilities with its most liquid assets, excluding inventory.

Current Liabilities

Short-term financial obligations that are due within one year or within a company's operating cycle, whichever is longer.

Accounts Receivable Turnover

A financial ratio that measures how efficiently a company collects debts from its customers.