Wal-Mart Created a Competitive Advantage with Its Inventory System to Reduce

question 101

Multiple Choice

Wal-Mart created a competitive advantage with its inventory system to reduce the ratio of cost of goods sold to sales expecting:

• A)to enjoy huge economic profits forever.
• B)its rivals will never imitate their strategy and it will continue to enjoy positive economic profits.
• C)its rivals will immediately do the same thing and it will end earning zero profits.
• D)to enjoy economic profits for a few years before its rivals caught up.
• E)it will at least be able to cover its fixed costs.

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Definitions:

Accounts Receivable

Funds that customers owe a company for products supplied or services rendered but have not yet been paid for.

Invoice Price

The price listed on an invoice, representing the amount the buyer agrees to pay the seller for goods or services provided.

Credit Terms

The conditions under which credit is extended by a seller to a buyer, including payment deadlines and interest rates.

Discount Period

The time period that a buyer has to take advantage of trade discounts offered by a seller for early payment of invoices.