The Purchasing Policy Guidelines of the Southern Supply Inc. indicate that the company is committed to procuring its goods, products, and services from a diversified pool of vendors, contractors, and service providers.

Despite these guidelines, Southern$$s purchasing manager prefers to maintain a small cadre of suppliers that he knows and trusts.

How would you expect this situation to affect the assessment of Southern$$s financial condition and performance?

The purchasing manager$$s behavior should be expected to increase Southern$$s riskiness by increasing its exposure to potential supply shortages or mistimed deliveries.

Although nonquantitative factors may be relevant to a company$$s financial evaluation in general terms, the details of this specific situation are not relevant to the firm$$s financial condition or performance.

The purchasing manager$$s behavior should be expected to decrease Southern$$s riskiness. His belief that the use of trusted suppliers will prevent or eliminate any inventory or supply delays or outages is$,$ no doubt, correct.