Multiple Choice
In accounting, liabilities refer to ______.
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9. Current Liabilities
Types of Liabilities
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The interest rate a company pays on its loans depends in part on which of the following?
A
The company's advertising expenses
B
The company's inventory turnover ratio
C
The company's creditworthiness and risk profile
D
The company's total number of employees
Verified step by step guidance1
Understand that the interest rate a company pays on its loans is influenced by its creditworthiness and risk profile, which are key indicators of the company's ability to repay the loan.
Creditworthiness is typically assessed through factors such as the company's credit score, financial statements, and history of loan repayments.
Risk profile involves evaluating the company's financial stability, industry risks, and overall business performance to determine the likelihood of default.
Recognize that factors like advertising expenses, inventory turnover ratio, or the total number of employees are not directly relevant to determining the interest rate on loans.
Focus on improving the company's creditworthiness and managing risks effectively to secure loans at favorable interest rates.
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