If a Supplier Is Unlikely to Meet Future Requirements,the Buying

question 48

Multiple Choice

If a supplier is unlikely to meet future requirements,the buying firm has several alternatives.Which is typically not one of the alternatives?

• A) Assist with financing to help the supplier meet future requirements
• B) Negotiate a better price with the supplier for the current contract
• C) Assist with technological assistance to help the supplier meet future requirements
• D) Develop new sources to replace the supplier
• E) Develop the capability internally to replace the supplier

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Definitions:

Leverage Gain

The increase in potential returns to an investor achieved by using borrowed funds or financial derivatives.

Cost of Equity

The return a company requires to decide if an investment meets capital return requirements; it represents the compensation the market demands in exchange for owning the asset and bearing the risk of ownership.

Capital Structure

The composition of a company’s debt and equity used to finance its overall operations and growth.

Market Risk Premium

The additional return an investor requires from a market portfolio over the risk-free rate, compensating for the risk of the investment.