Question

Which of the following statements is correct?

Accepted Answer

A)  Under normal conditions, a firm's expected ROE probably would be higher if it financed with short-term than with long-term debt, but the use of short-term debt would probably increase the firm's risk. 
B)  Conservative firms generally use no short-term debt and thus have zero current liabilities. 
C)  A short-term loan can usually be obtained more quickly than a long-term loan, but the cost of short-term debt is likely to be higher than that of long-term debt. 
D)  If a firm that can borrow from its bank buys on terms of 2/10, net 30, and if it must pay by Day 30 or else be cut off, then we would expect to see zero accounts payable on its balance sheet. 
E)  If one of your firm's customers is "stretching" its accounts payable, this may be a nuisance but does not represent a real financial cost to your firm as long as the firm periodically pays off its entire balance. 
A)  Under normal conditions, a firm's expected ROE probably would be higher if it financed with short-term than with long-term debt, but the use of short-term debt would probably increase the firm's risk. 
B)  Conservative firms generally use no short-term debt and thus have zero current liabilities. 
C)  A short-term loan can usually be obtained more quickly than a long-term loan, but the cost of short-term debt is likely to be higher than that of long-term debt. 
D)  If a firm that can borrow from its bank buys on terms of 2/10, net 30, and if it must pay by Day 30 or else be cut off, then we would expect to see zero accounts payable on its balance sheet. 
E)  If one of your firm's customers is "stretching" its accounts payable, this may be a nuisance but does not represent a real financial cost to your firm as long as the firm periodically pays off its entire balance.

Which of the following statements is correct?

An Overview of Managerial Finance

Analysis of Financial Statements

The Financial Environment: Markets, institutions, and Investment Banking

The Time Value of Money

The Cost of Money

Bonds Debt-Characteristics and Valuation

Stocks Equity-Characteristics and Valuation

Risk and Rates of Return

Capital Budgeting Techniques

Project Cash Flows and Risk

The Cost of Capital

Capital Structure

Distribution of Retained Earnings: Dividends and Stock Repurchases

Working Capital Policy

Managing Short-Term Assets

Financial Planning and Control

project Cash Flows and Risk

Filters

Exam 16: Managing Short-Term Liabilities Financing

Which of the following statements is correct?

An Overview of Managerial Finance

Analysis of Financial Statements

The Financial Environment: Markets, institutions, and Investment Banking

The Time Value of Money

The Cost of Money

Bonds Debt-Characteristics and Valuation

Stocks Equity-Characteristics and Valuation

Risk and Rates of Return

Capital Budgeting Techniques

Project Cash Flows and Risk

The Cost of Capital

Capital Structure

Distribution of Retained Earnings: Dividends and Stock Repurchases

Working Capital Policy

Managing Short-Term Assets

Financial Planning and Control

project Cash Flows and Risk

Filters