What are some examples of spontaneous and discretionary sources of financing?
What will be an ideal response?
Accounts payable and accrued expenses are reasonably expected to rise and fall with the level of firm sales in the
percent of sales forecast. Because these two categories of current liabilities normally vary directly with the level of
sales, they are often referred to as sources of spontaneous financing. Included in spontaneous financing are trade credit
and other accounts payable that arise spontaneously in the firm's day-to-day operations. Notes payable, long-term
debt, common stock, and paid-in capital are not assumed to vary directly with the level of firm sales. These sources of
financing are termed discretionary financing, which requires an explicit decision on the part of the firm's management
every time funds are raised.
You might also like to view...
Social ________ ethics believes that the rightness of an action is based on the customs and norms of a particular community.
Fill in the blank(s) with the appropriate word(s).
Samuel’s supervisor is reviewing his attendance and punctuality record as part of an annual evaluation. This type of evaluation is known as a _________ appraisal.
A. trait B. behavior C. results D. statistical E. None of the above
A____________________ is a group of people who serve a certain profession.
Fill in the blank(s) with the appropriate word(s).
In general, if investors believe that a company is relatively risky and/or has relatively poor growth prospects, then the company will have relatively high P/E, M/B, and EV/EBITDA ratios.
Answer the following statement true (T) or false (F)