Assume a Company Has Been Maintaining a Receivables Factoring Program

question 7

Multiple Choice

Assume a company has been maintaining a receivables factoring program for the past five years and has been experiencing the same level of sales, factoring, and bad debts over that period. Customers typically pay their receivables within 60 days. Which of the following is true with respect to the current period (all else equal) ?

• A) The accounts receivable balance will decrease.
• B) Cash flow from operations is stable.
• C) Net income is likely to decline.
• D) Accounts receivable payable within 60 days cannot be factored.

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Definitions:

Giving Orders

The act of commanding, directing, or instructing someone to do something.

Responsibility

The state or fact of having a duty to deal with something or of having control over someone.

Express Opinions

The act of verbally or non-verbally conveying one's personal thoughts, beliefs, or preferences.

Delegating Work

The process in which a leader or manager assigns responsibility and authority for specific tasks or projects to subordinates, allowing them to make certain decisions and take action within defined limits.