Operating Capability Refers to

question 63

Multiple Choice

Operating capability refers to

• A)the ability of a company to adapt to unexpected needs and opportunities
• B)the uncertainty or unpredictability of the future results of a company
• C)a measure of overall company performance
• D)a company's ability to maintain a given level of operations

---

Definitions:

Property, Plant, Equipment

Long-term tangible assets owned by a business, used in its operations and not intended for resale, such as buildings, machinery, and vehicles.

Operating Activities

Business activities directly related to the production and delivery of goods and services, impacting the operating income.

Direct Method

The direct method is a way of preparing the cash flow statement that involves listing all the major operating cash receipts and payments during the period, showing the net cash provided by operating activities.

Operating Expenses

Recurring expenses incurred through normal business operations, such as rent, utilities, and payroll, excluding COGS.