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Correct. Clever, Inc., would have to generate up to another $ 1 0 , 0 0 0 , calculated as follows, to recover the loss
Correct. Clever, Inc., would have to generate up to another $ calculated as follows, to recover the loss from the fraud:
With a profit margin of percent, and especially being a manufacturing company, it could take up to another $ in revenue for Clever, Inc., to recover the $ fraud loss.
Alexander, Inc., would have to generate no more than another $ calculated as follows, to recover the loss from the fraud:
Because its profit margin is percent, and because it is a service firm with no cost of goods sold, it would not take more than another $ in revenue for Alexander, Inc., to recover the $ fraud loss.
These amounts are different because the profit margins of these companies are different. Clever, Inc., is a manufacturing company, and for every $ of net income it must generate $ On the other hand, Alexander, Inc., must generate no more than $ for each $ lost from the fraud. It is usually easier for a service business with a higher profit margin to recover from fraud losses than it is for manufacturing companies, such as Clever, Inc., that must generate more money to recover fraud losses.
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