When a Loan Is Amortized, a Relatively High Percentage of the Payment

question 124

True/False

When a loan is amortized, a relatively high percentage of the payment goes to reduce the outstanding principal in the early years, and the principal repayment's percentage declines in the loan's later years.

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Definitions:

Receivables

Money owed to a company by its customers for goods or services that have been delivered or used but not yet paid for.

Sales

The total amount of goods or services sold by a business within a certain period.

Total Assets Turnover Ratio

A financial metric that measures a company's effectiveness in using its assets to generate sales, calculated as sales divided by total assets.

Assets

Resources owned by a company that have economic value and can be converted into cash.