Your Firm Is a Supplier to a Major Chain of Discount

question 122

Multiple Choice

Your firm is a supplier to a major chain of discount stores. You have heard rumors that this chain of discount stores is struggling financially. Which financial ratios would indicate the discount store's ability or inability to pay its short-term debts?

• A) liquidity ratios
• B) leverage ratios
• C) activity ratios
• D) profitability ratios

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Definitions:

Boilerplate

Standardized text, typically in contracts or legal documents, used repeatedly without significant change.

Framework Agreement

A long-term agreement with suppliers that sets out terms and conditions under which specific purchases (calls-offs) can be made throughout the term.

Direct Authority

Authority given to an individual within an organization where they have the power to make decisions and expect those decisions to be followed.

Express Authority

Legal power explicitly granted to an individual or organization to perform certain actions or make decisions.