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14 Mar 2025, 12:30
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bhavikachawla97
can someone please explain why the answer to q3 is E? the question clearly states that all 5 factors have equal probability
In the Researchers tab:
- Higher growth opportunities, higher margins, or less competent management → likely to engage in channel stuffing
- Large company size and high-reputation auditors → likely to detect channel stuffing → reduces probability of channel stuffing
So, we're looking for a company with high growth opportunities, high margins, low management competence, small size, and low-reputation auditors.
In the Companies tab (1 is highest, 5 is lowest):
- Highest growth opportunities: E
- Highest margins: C (with E ranked second)
- Lowest management competence: E
- Lowest size: E
- Lowest auditor reputation: A (with E ranked second)
Company E is clearly the most likely to engage in channel stuffing.
Hope this helps.
16 Mar 2025, 21:45
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Vatsal7794
Hi KarishmaB
For question 3 the answer is E
Also can you please explain below line
"At the same time, our research shows that both the size of the company and the reputation of the company's auditors are positively correlated with the probability that any potential channel stuffing would be detected, and this, in turn, reduces the probability of channel stuffing occurring"
what I inferred is - If Size of company is Large & reputation is high then there is high probability that Channel stuffing would be detected as they are positively related but at the end of the sentence it says "reduces the probability". Why there is contradiction?
For question 3 the answer is E
Also can you please explain below line
"At the same time, our research shows that both the size of the company and the reputation of the company's auditors are positively correlated with the probability that any potential channel stuffing would be detected, and this, in turn, reduces the probability of channel stuffing occurring"
what I inferred is - If Size of company is Large & reputation is high then there is high probability that Channel stuffing would be detected as they are positively related but at the end of the sentence it says "reduces the probability". Why there is contradiction?
Thanks for pointing it. Missed some data of tab 2! Edited.
Quote:
"At the same time, our research shows that both the size of the company and the reputation of the company's auditors are positively correlated with the probability that any potential channel stuffing would be detected, and this, in turn, reduces the probability of channel stuffing occurring"
What you inferred is correct: If Size of company is Large & reputation is high then there is high probability that Channel stuffing would be detected, IF IT OCCURS.
This is like saying that big companies are under the scanner all the time. So if they do anything illegal, they will get caught. Hence they refrain from doing illegal business.
Since the probability of detection is high (in case the company does engage in channel stuffing), the company refrains from doing it. Makes sense?
16 Mar 2025, 21:46
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Yes, absolutely.
Gmatguy007
My approach is the following: based on the second tab, we are looking for a company with high opportunities and profit but low competence. We are informed that as the size and reputation increase, so does the probability of stuffing being detected. This, in turn, has a negative correlation with the occurrence of stuffing. Therefore, we need to find a company with high opportunities and profit but low competence, size, and reputation. The last tab mentions that on a scale of 1-5, the smaller the number, the higher the factor. This means we want the lowest possible numbers for growth and profit but the highest for the other three factors. The only company that meets these criteria is E. Am I correct bb chetan2u Bunuel KarishmaB ?
19071995julia
Q3?
please ;(
please ;(
