When Conducting a Worst-Case Scenario Analysis, You Should Assume That

question 275

Multiple Choice

When conducting a worst-case scenario analysis, you should assume that:

• A) The sales quantity is at the upper end of your expectations.
• B) The highest sales price obtainable in the marketplace can be charged.
• C) No competition exists in the marketplace.
• D) Your variable costs per unit are at the high end of the spectrum of possible prices.
• E) Your fixed costs are constant and at the low end of your cost range.

---

Definitions:

Receivable from Factor

Funds to be received from a factor, a financial intermediary that purchases receivables from a company, providing it with immediate cash.

Factoring Expense

Costs associated with the process of selling accounts receivable to a third party to obtain immediate cash.

Financing Agreement

A legal contract between a borrower and a lender, outlining the terms for borrowing funds, including the interest rate, repayment schedule, and other conditions.

Accounts Receivable

Money owed to a business by its clients or customers for goods or services that have been delivered but not yet paid for.