Preferred Pet Care Clinic,Inc Is a Mobile Veterinary Care Company

question 73

Multiple Choice

Preferred Pet Care Clinic,Inc is a mobile veterinary care company that travels to its clients' homes to administer veterinary care to well and sick pets.Its business is booming,with a full schedule of appointments each week.On a weekly basis,the office manager orders a larger amount of vaccines,antibiotics,and other products from its suppliers with the understanding that it will pay for these supplies in one month's time.A sizeable percentage of Preferred Pet Care's clients are elderly persons who are on fixed incomes.These customers eventually pay their bills,but usually not upon receipt of service.It sometimes takes them upwards of two months to remit.As an accounting intern willing to advise the owner,which of the following statements is important to your analysis?

• A)Noting the fact that the clinic continues to order more supplies each month,the veterinary clinic will certainly not experience a cash flow crunch.If anything,it would be a good idea to hire additional veterinarians.
• B)Noting the fact that the clinic continues to order larger amounts of supplies each month,the company should make certain that its cost of goods sold is not greater than 50% of the price it is charging.
• C)Due to the fact that clients are not paying when service is received,the clinic may experience a cash flow crunch;an inability to maintain enough cash to pay for its supplies each month.
• D)Preferred Pet Care is doing everything right.It was wise to develop a niche market because senior citizens have greater savings than younger families.This is a good business and recessionary proof.The firm will continue to grow and prosper.

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