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:

Standard Error

A measure of the variation or dispersion of sample means from the true population mean.

Test Statistic

A standardized value derived from sample data, used to determine the extreme nature of an observed outcome under a null hypothesis.

Lewis and Clark

Explorers Meriwether Lewis and William Clark who led the Corps of Discovery Expedition (1804-1806) commissioned by President Thomas Jefferson to explore the newly acquired western portion of the United States.

Expedition

A journey or voyage undertaken by a group of people with a specific purpose, often related to exploration, research, or military objectives.