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Why Is It Beneficial for a Firm to Use a Contract

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Essay

Why is it beneficial for a firm to use a contract manufacturer or contract service provider? Provide at least one example of a firm that uses a contract provider and the benefit experienced because of this.


Definitions:

Accounts Receivable Turnover

A financial ratio that measures how many times a company collects its average accounts receivable in a period.

Sales

The total amount of goods or services sold by a company, serving as a primary source of revenue.

Net Income

A company's overall earnings following the deduction of all expenses and taxes from its gross income.

Average Collection Period

The average number of days it takes for a company to collect receivables from its customers, indicating the efficiency of its credit policies.

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