When Dave's Appliances struggles financially, Dave decides to sell his accounts receivable to a financial company,...

 

Transcribed Image Text:

When Dave's Appliances struggles financially, Dave decides to sell his accounts receivable to a financial company, known as a factor, which pays him $60,000 for receivables with a total face value of $100,000. Which of the following best describes how the financial company can make a profit off these accqunts receivable? Select one: a. The factor only profits if it can secure more sales from these customers. b. The factor only profits if the customers don't know that a factor has bought their receivables. c. The factor profits if it can produce the same products the company did at a lower cost. d. The factor profits if it can collect more than what it paid for the accounts. e. The factor profits only if new accounts receivable are acquired. When Dave's Appliances struggles financially, Dave decides to sell his accounts receivable to a financial company, known as a factor, which pays him $60,000 for receivables with a total face value of $100,000. Which of the following best describes how the financial company can make a profit off these accqunts receivable? Select one: a. The factor only profits if it can secure more sales from these customers. b. The factor only profits if the customers don't know that a factor has bought their receivables. c. The factor profits if it can produce the same products the company did at a lower cost. d. The factor profits if it can collect more than what it paid for the accounts. e. The factor profits only if new accounts receivable are acquired.

Answer rating: 100% (QA)

d The factor profits if it can collect more than it paid for th... View the full answer