Suppose that the Japanese firm Sanpo will receive $1.5 million from its U.S. sales subsidiary on June

Question:

Suppose that the Japanese firm Sanpo will receive $1.5 million from its U.S. sales subsidiary on June 3. Moreover, on June 3 a U.S. bank is due $2.3 million from Sanpo as repayment of a loan. Explain how netting by Sanpo would apply to this example, and what the advantages are.