A Firm Acquiring Another Firm at a Different Level of Activity

question 81

Multiple Choice

A firm acquiring another firm at a different level of activity within a channel of distribution is called:

• A) vertical integration.
• B) a tying contract.
• C) dual distribution.
• D) horizontal integration.
• E) a regrouping activity.

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Definitions:

Receivables Factoring

The process of selling a business's accounts receivable to a third party at a discount to quickly generate cash.

Bad Debts

Financial amounts owed to a company that are unlikely to be paid by debtors, often recognized as an expense on the company's income statement.

Discounted Amount

The present value of a future sum of money or stream of cash flows given a specific rate, reflecting the time value of money.

Shortage Costs

Shortage Costs are the costs incurred when demand exceeds supply, including lost sales, backorder costs, and potential deterioration of customer satisfaction.