Which of the Following Statements Is FALSE

question 1

Multiple Choice

Which of the following statements is FALSE?

• A)Horizontal integration entails the merger of a firm and its supplier or a firm and its customer.
• B)Because an increase in the price of the commodity raises the firm's costs and the supplier's revenues, these firms can offset their risks by merging.
• C)For many firms, changes in the market prices of the raw materials they use and the goods they produce may be the most important source of risk to their profitability.
• D)Like insurance, hedging involves contracts or transactions that provide the firm with cash flows that offset its losses from price changes.

Calculate incremental cash inflow and net present value (NPV) related to credit policy changes.

Grasp the significance of safety stocks and their impact on average inventory and economic order quantity (EOQ).

Understand the calculation of average accounts receivable balance in relation to sales and credit terms.

Assess the financial impact of granting credit to new customers and the NPV of such decisions.

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