When an Exporter Sells an Account Receivable to a Factor

question 13

True/False

When an exporter sells an account receivable to a factor, the factor will attempt to collect payment from the importer, but if the importer is unable to pay, the factor can collect the payment from the exporter.

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Definitions:

Pretax Return

The profit a company generates before taxes are taken into account, often expressed as a percentage of sales or investment.

Salvage Value

The forecasted selling price for an asset at the end of its operational life.

Discount Rate

The financial rate implicated in translating future cash flows into their present value during discounted cash flow analysis.

Financially Attractive

Refers to investment opportunities or assets that are expected to provide substantial returns or profits.