Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

7. Receivables and Investments

Types of Receivables

Financial Accounting

7. Receivables and Investments

Types of Receivables

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Multiple Choice

Which of the following is one of the factors that determine a company's credit rating?

The number of employees in the company

The physical size of the company's office

The company's advertising budget

The quality of the company's receivables

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Verified step by step guidance

Understand the concept of a company's credit rating: A credit rating is an assessment of a company's ability to repay its debts and financial obligations. It is influenced by various financial and operational factors.

Identify the factors that typically affect credit ratings: These include financial stability, cash flow, debt levels, profitability, and the quality of assets such as receivables.

Focus on the quality of receivables: Receivables represent money owed to the company by customers. High-quality receivables are those that are likely to be collected on time and in full, which positively impacts the company's liquidity and creditworthiness.

Eliminate irrelevant factors: The number of employees, physical size of the office, and advertising budget do not directly impact a company's ability to repay debts or its financial stability, making them irrelevant to credit ratings.

Conclude that the quality of the company's receivables is a key factor in determining its credit rating, as it directly affects the company's cash flow and ability to meet financial obligations.