Federal Express Enters into Contracts with Independent Truck Operators Who

question 49

Multiple Choice

Federal Express enters into contracts with independent truck operators who offer FedEx service and who are rewarded by the volume (cubic feet) of packages they carry. FedEx does not hire more independent drivers because

• A)it is concerned about a possible downturn in the economy and the effects of overexpansion.
• B)it cannot afford more trucks and more drivers.
• C)of the principal-agent problem.
• D)it is a corporation, so it wants to have a limited number of independent truck owners operating as proprietorships.
• E)trucks are not a technologically efficient method of transporting parcels.

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Definitions:

Financial Report

A formal record of the financial activities and position of a business, individual, or other entity over a period.

Liquidation

The process of closing a business and distributing its assets to claimants, typically after a company is unable to meet its financial obligations.

Profit and Loss Ratio

Measures the efficiency of a company in generating profits from its operations, calculated by dividing net profit by net sales.

Liquidation Expenses

Costs associated with the process of winding down a company's business operations and distributing its assets to claimants.