Which of the Following Statements Is True Regarding the Leverage

question 79

Multiple Choice

Which of the following statements is true regarding the leverage of supply-chain savings?

• A) Supply chain leverage is about the same for all industries.
• B) Supply chain savings exert more leverage as the firm's purchases are a smaller percent of sales.
• C) Supply chain savings exert more leverage as the firm has a lower net profit margin.
• D) Supply chain leverage depends only upon the percent of sales spent in the supply chain.
• E) Supply chain savings have no impact on net margin.

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Definitions:

Percentage-of-Completion

An accounting method used to recognize revenue and expenses of long-term projects proportionally to the project's completion level.

Revenue Recognition

The accounting principle that dictates the conditions under which revenue is recognized or recorded, primarily focusing on the timing and amount.

Percentage-of-Completion

An accounting method recognizing revenues and expenses of long-term contracts as a percentage of work completed.

Transfer Pricing

The price charged when two parts of the same multinational corporation, often the parent company and a subsidiary in another country, engage in trade with one another.