The Least Expensive Form of Short-Term Financing Is

question 20

Multiple Choice

The least expensive form of short-term financing is

• A) trade credit.
• B) promissory notes.
• C) unsecured bank loans.
• D) secured bank loans.
• E) factoring.

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Definitions:

Sales

The activities involved in selling products or services, including marketing, negotiation, and transaction processes.

Desired Profit

The amount of net income that a company aims to achieve within a specific period.

Contribution Margin Ratio

The contribution margin ratio is a financial metric that measures the proportion of revenue that exceeds total variable costs, indicating how much of each sale contributes to covering fixed costs.

Profit-Volume Ratio

A financial tool used to analyze the relationship between profit and sales volume, showing the impact of sales changes on profits.