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A supplier, when considering offering credit to a new customer, is most interested in the customer’s:compliance with accounting standards.annual dividends.taxable income.ability to pay off debts as they fall due.

Question

A supplier, when considering offering credit to a new customer, is most interested in the customer’s:compliance with accounting standards.annual dividends.taxable income.ability to pay off debts as they fall due.

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Solution

A supplier, when considering offering credit to a new customer, is most interested in the customer’s:

  1. "Ability to pay off debts as they fall due."

When a supplier offers credit to a customer, they are essentially lending money to the customer. Therefore, the supplier would be most interested in the customer's liquidity, or their ability to pay off debts as they fall due. This can be assessed by looking at the customer's cash flow, current ratio, quick ratio, and other financial indicators.

The other options are less relevant:

  • Compliance with accounting standards: While this is important for financial reporting and transparency, it doesn't directly indicate the customer's ability to pay their debts.

  • Annual dividends: This is more relevant to shareholders than to suppliers. It doesn't directly indicate the customer's ability to pay their debts.

  • Taxable income: While this can give some indication of the customer's profitability, it doesn't directly indicate the customer's liquidity or ability to pay their debts.

This problem has been solved

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