Podcast
Questions and Answers
What is the primary purpose of setting credit terms in account receivable?
What is the primary purpose of setting credit terms in account receivable?
- To decide on the short term financing options
- To determine the creditworthiness of customers (correct)
- To establish a line of credit with the bank
- To allocate the requirement for collections
What is the main advantage of debt financing over equity financing?
What is the main advantage of debt financing over equity financing?
- It does not require additional shareholder investment (correct)
- It allows for greater control over the business
- It provides tax benefits through interest deductions
- It provides a higher return on investment
What is the formula to calculate the Net Present Value (NPV) of an investment?
What is the formula to calculate the Net Present Value (NPV) of an investment?
- NPV = Cash Flow * (1 + i)^t
- NPV = Cash Flow + (1 + i)^t
- NPV = Cash Flow - (1 + i)^t
- NPV = Cash Flow / (1 + i)^t (correct)
What is the purpose of factoring in short term financing?
What is the purpose of factoring in short term financing?
What is the main source of revenue for a business?
What is the main source of revenue for a business?
What is the primary purpose of a revolving credit agreement?
What is the primary purpose of a revolving credit agreement?
What is the primary purpose of liquidity ratios in finance?
What is the primary purpose of liquidity ratios in finance?
What does a high inventory turnover ratio indicate?
What does a high inventory turnover ratio indicate?
What is the purpose of the debt-to-equity ratio?
What is the purpose of the debt-to-equity ratio?
What is the formula for calculating the return on equity?
What is the formula for calculating the return on equity?
What is the definition of net working capital?
What is the definition of net working capital?
What is the purpose of the current ratio?
What is the purpose of the current ratio?