A Small Company Might Prefer to Concentrate Purchases with One

question 7

Multiple Choice

A small company might prefer to concentrate purchases with one supplier for which the following reasons?

• A) insurance against interruptions caused by strikes
• B) a particular supplier 's superiority in product quality
• C) knowing the customer's loyalty, the supplier may provide better prices and service
• D) to locate the best source in terms of price, quality and service with each purchase

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Definitions:

Restrictive Covenants

Clauses in contracts that impose limitations or conditions on the actions of parties, commonly found in lending agreements to protect the lender.

Indenture

A formal legal agreement, contract, or document, especially one relating to a loan or bond issue.

Debenture

An unsecured bond.

Sinking Fund

A savings fund accumulated over time for the purpose of paying off debt or replacing a large expense in the future.