If You Extend Credit, It Is Critical to Minimize This

question 35

Multiple Choice

If you extend credit, it is critical to minimize this number to keep cash flowing.

• A) receivable turnover ratio
• B) inventory turnover ratio
• C) collection-period ratio
• D) debt-to-equity ratio

---

Definitions:

Credit Terms

Conditions under which credit is extended by a lender to a borrower, including payment due dates, interest rates, and repayment schedules.

Credit Period

The time frame granted by a creditor within which payment for a purchase must be made; typically used in commercial transactions.

Credit Risk

The risk of loss resulting from a borrower's inability to repay a loan or meet contractual obligations.

Carrying Cost

A financial term representing the total cost of holding inventory, including storage, insurance, taxes, and opportunity costs.