What Are Some of the Disadvantages of Long-Term Supply Contracts

question 11

Essay

What are some of the disadvantages of long-term supply contracts?

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Definitions:

Par Value

The stated value of a share of stock or a bond, set at the time of its issuance, and used to determine its trading value.

Par Common Stock

The face value of a share of common stock as specified in the corporate charter.

Purchase Price

The total cost incurred to acquire an asset, including the price of the asset itself along with any additional costs necessary to bring the asset to a usable state.

Treasury Stock

Stock that has been bought back by the issuing company, reducing the amount of outstanding stock on the open market.