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Which one of the following statements about trade credit is correct? Trade credit is:
Suggested Answer: C
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Choice 'c' is correct. A shortcut computation for operating leverage is the ratio of fixed costs to variable costs. If total cost is $100,000 and variable cost is 40% of total costs (or $40,000), then fixed costs must be 60% (or $60,000). Operating leverage is then calculated as follows:
$60,000/$40,000 = 1.5
Choice 'a' is incorrect. .4 is obtained by dividing $100,000 into the variable cost of $40,000.
Choice 'b' is incorrect. .6 is obtained by dividing total costs into fixed costs.
Choice 'd' is incorrect. 2.5 is obtained by dividing total costs by variable costs.
35 comments · newest first
EM
Emmett
10 months ago
Long-term financing? Sounds off to me.
JA
Jaclyn
11 months ago
Not important for small firms? That's not true!
CI
Ciara
11 months ago
Wait, is trade credit really that cheap?
ED
Eden
11 months ago
Totally agree, it's a common issue!
LI
Ligia
11 months ago
Trade credit can be risky if buyers default.
TH
Theron
12 months ago
I’m a bit confused about the long-term financing aspect; I thought trade credit was more short-term.
TI
Tiffiny
12 months ago
I feel like we had a practice question about trade credit being an inexpensive source of financing, but I can't recall the details.
CU
Curtis
12 months ago
I remember discussing how trade credit can be risky for sellers if buyers default, so I might lean towards option C.
RI
Rickie
1 year ago
I think trade credit is actually a pretty important source of financing for small firms, but I'm not sure if that's what the question is asking.
DE
Denae
1 year ago
I remember learning that trade credit is actually a pretty inexpensive way for businesses to finance their operations, at least compared to other options like bank loans. So I'm leaning towards D as the correct answer.
GR
Grover
1 year ago
Okay, let me see. Trade credit is when a supplier allows a business to delay payment for goods or services, right? I think the key here is that it's a source of short-term financing, not long-term. So I'm going to go with C.
CA
Carla
1 year ago
Hmm, I'm a bit unsure about this. I know trade credit is an important source of financing for small firms, but I can't remember if it's considered long-term or short-term. I'll have to think this through carefully.
AR
Arlene
1 year ago
I'm pretty confident about this one. Trade credit is definitely subject to the risk of buyer default, so I think the correct answer is C.
CL
Clorinda
1 year ago
This seems like a straightforward question, but I want to make sure I'm not missing anything. I'm pretty confident that the correct answers are B and D - Images and Links, and Rich Text. Those seem like the most logical elements to use for providing guidance to sales reps.
EV
Evan
1 year ago
Hmm, I'm a bit confused by the wording of the question. Is it asking why deployment takes longer in a monolith, or why it takes longer in microservices? I'll need to think this through carefully.
AI
Aileen
1 year ago
Okay, let's see. The manager is focused on setting goals, providing coaching and feedback, and rewarding employees. That sounds a lot like reinforcement theory, so I'm guessing that's not the one they're looking for.
MA
Marshall
1 year ago
I'm not entirely sure, but I think corruption in payment and kickbacks are also problematic, right?
KA
Kanisha
1 year ago
Hmm, not sure about the exact syntax for the pod names. I'll need to double-check the formatting.
TA
Tamera
1 year ago
Lean Six Sigma, for sure. That's the key methodology for analyzing business processes and finding ways to improve efficiency and cut costs. Seems like the obvious choice here.
BE
Beatriz
1 year ago
I'm going with option C. The risk of buyer default is a crucial consideration when it comes to trade credit. It's like playing financial Russian roulette, but without the revolver.
LE
Leatha
1 year ago
Ha! I bet the person who wrote this question has never tried to collect on overdue trade credit. It's about as 'inexpensive' as a trip to the dentist!
HE
Herman
1 year ago
I think the statement about trade credit being inexpensive is not always true.
RU
Rusty
1 year ago
Definitely, the risk of buyer default is always there with trade credit.
MA
Martina
1 year ago
I agree, collecting on overdue trade credit can be a nightmare.
MA
Margret
1 year ago
I'm not sure about option D. Trade credit may not always be an inexpensive source of financing, especially for small firms with limited bargaining power.
ON
Ona
1 year ago
That's true, but it can also be subject to risk of buyer default, so small firms need to be cautious.
RE
Reita
1 year ago
Option D is correct. Trade credit is usually an inexpensive source of external financing.
LE
Lemuel
2 years ago
I'm not sure, but I think D) Usually an inexpensive source of external financing could also be correct.
TI
Timmy
2 years ago
Option C is clearly the correct answer. Trade credit is indeed subject to the risk of buyer default. Small businesses should always be cautious when extending credit to customers.
CH
Charlette
1 year ago
Always important to consider the potential for default when offering trade credit.
DA
Daryl
1 year ago
Trade credit can be a helpful financing option, but it does come with risks.
LA
Lauran
1 year ago
It's important for small businesses to be aware of the risk of buyer default.
NA
Narcisa
1 year ago
I agree, option C is the right choice.
MI
Mireya
2 years ago
I agree with Omega, trade credit is definitely subject to risk of buyer default.
OM
Omega
2 years ago
I think the correct statement is C) Subject to risk of buyer default.