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Questions and Answers
Why is it important to take into account the loss of discounts suppliers offer for early payment?
Why is it important to take into account the loss of discounts suppliers offer for early payment?
- To minimize the cost of financing (correct)
- To understand the impact on cash flow
- To increase profitability
- To maintain goodwill with suppliers
What is the key difference between operating leases and finance leases?
What is the key difference between operating leases and finance leases?
- Length of lease agreement
- Ownership of the asset (correct)
- Payment structure
- Asset maintenance responsibilities
In a sale and lease back arrangement, what benefit does the company obtain?
In a sale and lease back arrangement, what benefit does the company obtain?
- Immediate cash flow (correct)
- Long-term ownership of premises
- Full control over property
- Reduced rental costs
How are short-term loans typically classified?
How are short-term loans typically classified?
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Which source of finance is considered a temporary solution for immediate cash needs?
Which source of finance is considered a temporary solution for immediate cash needs?
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What is a characteristic of short term overdrafts that distinguishes them from short term loans?
What is a characteristic of short term overdrafts that distinguishes them from short term loans?
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How does trade credit impact a company's liquidity position?
How does trade credit impact a company's liquidity position?
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Why might a company prefer a short-term loan over an overdraft facility?
Why might a company prefer a short-term loan over an overdraft facility?
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What is a common feature of most short-term financing options?
What is a common feature of most short-term financing options?
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How do operating leases contribute to financial leverage for a business?
How do operating leases contribute to financial leverage for a business?
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