Estimates are based on both subjective and objective factors
a. True
b. False
Indicate whether the statement is true or false
True
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Electro Corporation extends credit to its customers to purchase appliances, furniture, and other goods. Electro Corporation could borrow from a bank using its accounts receivable as collateral, thereby placing debt on the balance sheet. Electro Corporation would then use the cash collections from the receivables to repay the bank loan with interest. Instead, Electro Corporation sells the accounts
receivable to the bank for an amount that is less than the cash the bank expects to collect from receivables purchased. The amount takes account of expected defaults, which would reduce the cash generated by the receivables. This difference between the amount paid to Electro Corporation by the bank for the receivables and the amount that the bank expects to collect from the receivables provides the bank with its expected return. Electro Corporation must transfer additional uncollected receivables to the lender/purchaser bank under either of two conditions: (1) if any receivables become uncollectible, and (2) if interest rates rise above a specified level. Which of the following is/are true? a. Electro Corporation bears both credit risk and interest rate risk and should treat the transfer of receivables as a loan, with debt appearing on its balance sheet. b. Electro Corporation bears both credit risk and interest rate risk and should not treat the transfer of receivables as a loan, with no debt appearing on its balance sheet. c. Electro Corporation does not bear credit risk or interest rate risk and should not treat the transfer of receivables as a loan, with no debt appearing on its balance sheet. d. Electro Corporation has no further obligation and will treat this transaction as a sale, with no incremental debt on the balance sheet. e. Electro Corporation bears credit risk but no interest rate risk and should treat the transfer of receivables as a loan, with debt appearing on its balance sheet.
Which of the following is an advantage of central warehousing for a chain retailer?
a. lower transportation costs to individual stores b. closeness to individual stores c. increased capability of quick response systems d. increased use of mechanization in the processing of goods
Conflict research is frequently a __________ of ____________
a. Survey/problems b. Tool/researchers c. Tool/managerialism d. Both b & c
What are the strategic disadvantages of a forward vertical integration strategy?
What will be an ideal response?