Some Suggestions for Maintaining Family Relationships and Friendships When Borrowing

question 53

Multiple Choice

Some suggestions for maintaining family relationships and friendships when borrowing for a business are:

• A)keep the arrangement strictly family.
• B)borrow as much as you can.
• C)an oral contract is as good as a written contract.
• D)treat the money as "bridge financing."

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Definitions:

Cash Increase

An uptick in the amount of liquid assets (cash and cash equivalents) that a company or individual has on hand.

Current Ratio

Current ratio is a liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year, by comparing current assets to current liabilities.

Net Working Capital

Net working capital is the difference between a company's current assets and current liabilities, indicating short-term financial health and the ability to cover its short-term obligations.

Factoring Receivable

The process of selling accounts receivable to a third party at a discount to quickly generate cash.