Which of the following is the best definition of a captive finance company.
A) A compilation of accounts receivable by the age of each account.
B) Wholly owned subsidiary that handles credit extension and receivables financing through commercial paper.
C) A discount given for a cash purchase.
D) Procedures followed by a firm in collecting accounts receivable.
E) Conditions on which a firm sells its goods and services for cash or credit.

Question

Quizplus · Accepted Answer

A captive finance company is a subsidiary whose purpose is to provide financing to customers buying the parent company's product. This often involves extending credit and managing receivables through various financial instruments, including commercial paper.

Which of the Following Is the Best Definition of a Captive