Question
1.Which one of the following best defines the term collection policy? (2pts) Process of determining the probability customers will not pay Set of guidelines used
1.Which one of the following best defines the term collection policy? (2pts)
Process of determining the probability customers will not pay
Set of guidelines used by a firm to determine the cost of offering credit to its customers
Daily process of handling cash inflows and outflows of cash
Set of procedures a firm follows in collecting accounts receivable
2.Which one of the following statements is correct? (2pts)
Firms should generally finance all of their assets with long-term debt.
Firms that follow restrictive financial policies can generally avoid short-term debt financing.
Long-term interest rates tend to be more volatile than short-term rates.
A firm is less apt to face financial distress if it adopts a flexible financial policy rather than a restrictive policy.
3.Which one of the following best describes a line of credit? (2pts)
Short-term loan secured by accounts receivable
Short-term loan secured by inventory
Long-term, prearranged, non-committed bank loan
Short-term prearranged bank loan that can be either committed or non-committed
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