Question

Concerning Supply Chain Finance, which of the following statements are true?

Select all correct answers.

a) In supply chain finance, the income statement provides a summary of the flows in and out of the firm over a period of time.

b) Direct costs do not vary with volume.

c) Depreciation are the non-cash expenses associated with the use of capital equipment.

d) A payback period is defined as ROA=Net Income/Assets.

e) None of the above.

Answer 1

Concerning Supply Chain Finance, which of the following statements are true

a)
In supply chain finance, the income statement provides a summary of the flows in and out of the firm over a period of time

This is FALSE
The income statement DOES NOT provide a summary of flows in and out. A cash flow provides this summary. An income statement tells about the profits generated on ACCRUAL basis.

b)
Direct costs do not vary with volume

This is FALSE. Direct costs are DIRECT because they vary DIRECTLY with the volume and are directly proportional.

c)
Depreciation are the non-cash expenses associated with the use of capital equipment.
This is TRUE. Depreciation is a non cash expense. There is no outflow of cash involved. Also depreciation is charged on capital assets.

d)
A payback period is defined as ROA=Net Income/Assets.
This is FALSE. Payback period is the period in which the company expects to recover the costs of an investment.