Michaelson Micro Parts supplies specialized springs and other parts to

QUESTION

Michaelson Micro Parts supplies specialized springs and other parts to Acme Widgets. As a supplier, how is Michaelson most likely to use Acme’s financial information?

A) to determine Acme’s tax liability
B) to reconcile it with its own financial information
C) to determine whether to extend Acme credit
D) to see whether Acme is profitable
E) to obtain information about Acme’s pricing

ANSWER

Answer: C
Explanation: C) Suppliers may extend credit to a firm that purchases from them, and as an outsider, they may use the firm’s financial information to tell whether they are creditworthy.