Which of the following is the most senior claim in the pecking order?
A)collateralized long-term debt
B)factored receivables
C)short-term debt with strong covenants
D)retained earnings

Question

Quizplus · Accepted Answer

Retained earnings represent profits that have been earned and kept within the company, meaning that they are not owed to any external creditors. Therefore, retained earnings are the most senior claim in the pecking order. Retained earnings represent profits that have been retained in the company rather than being paid out as dividends to shareholders. Therefore, they are considered the most senior claim as they have already been earned by the company and are not owed to any external creditors.

Which of the Following Is the Most Senior Claim in the Pecking