The Payback Period Is the Length of Time It Takes

question 98

True/False

The payback period is the length of time it takes for an investment to recoup its initial cost out of the cash receipts it generates.

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Definitions:

Quick Ratio

A liquidity metric that measures a company's ability to cover its short-term obligations with its most liquid assets, excluding inventory.

Quick Assets

Assets that can be quickly converted into cash without losing value, including cash, marketable securities, and accounts receivable.

Cash Equivalents

Brief-term investments with high liquidity, capable of being readily turned into fixed cash sums, and facing a negligible risk of value shifts.

Receivables

Amounts owed to a company by its customers from the sale of goods or services on credit.