Which Statement Concerning the Operating Cash Cycle (OCC) Is True

question 63

Multiple Choice

Which statement concerning the operating cash cycle (OCC) is true?

• A) It is possible to have a negative OCC.
• B) Reducing the time period for which inventory is held shortens the OCC.
• C) The longer the OCC, the greater the amount of working capital required.
• D) All of the statements are true.

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Definitions:

Moral Hazard

The risk that a party insulated from risk may behave differently than if they were fully exposed to the risk.

Adverse Selection

A situation where asymmetric information results in high-risk individuals being more likely to participate in an agreement or purchase, negatively affecting the seller or insurer.

Salaried Salesman

A salesperson who is compensated with a fixed salary rather than or in addition to commissions.

Employee Turnover

The rate at which employees leave a workforce and are replaced by new hires within a given period.