Reference no: EM132968606

Problem 1. Australian data on the timeliness with which businesses pay their accounts receivable suggests that

a) suppliers tend to be strict in imposing late penalties on their trading partners

b) businesses generally pay within the designated credit period

c) unlike repayment of bank credit, financial conditions in the economy do not normally affect the average debtor collection periods

d) suppliers tend not to enforce payment penalties against their trading partners

Problem 2. Evidence suggests that

a) there is less information asymmetry between businesses and their suppliers than between businesses and lenders

b) there is more information asymmetry between businesses and their suppliers than between businesses and lenders

c) businesses are more likely to default on bank credit than face an interest rate penalty for late payment to trade suppliers

d) Most commonly, payment terms for Australian businesses are between 31 and 60 days.