Chapter 15

spontaneous liabilities

financing that arises from the normal course of business; the 2 major short-term sources of such liabilities are accounts payable and accruals

unsecured short-term financing

short-term financing obtained without pledging specific assets as collateral

accounts payable management

management by the firm of the time that elapses between its purchase of raw materials and its mailing payment to the supplier

cost of giving up an early payment discount

the implied rate of interest paid to delay payment of an account payable for an additional nr of days

stretching accounts payable

paying bills as late as possible without damaging the firm’s credit rating

accruals

liabilities for services received for which payment has yet to be made