A Company Has Recognized That 1 in 1000 of Their

question 40

Multiple Choice

A company has recognized that 1 in 1000 of their products may default resulting in a non-harmful outcome for the user. This threshold is below their standards to issue a product recall. Instead they place a sticker on their product informing the user of the potential issue. What has the company just done?

• A)demonstrated eco-friendliness
• B)ruined their chances of profit
• C)employed caveat emptor
• D)issued a warning of potential injury

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Definitions:

Receivables Turnover Ratio

A financial metric that measures how efficiently a company collects on the credit it extends to customers by comparing net credit sales to average accounts receivable.

Profit Margin

The percentage of revenue that remains as profit after all expenses are deducted from sales.

Net Income

Net Income is the total earnings of a company after all expenses and taxes have been deducted from total revenue.

Payout Ratio

The proportion of earnings paid out as dividends to shareholders, often expressed as a percentage.