When Using the Bardahl Formula, an Increase in Accounts Payable

question 56

Multiple Choice

When using the Bardahl formula, an increase in accounts payable (while holding purchases and operating expenses constant) has which of the following effects on the working capital requirements?

• A)increase
• B)decrease
• C)no effect
• D)increase, decrease, or no effect, depending on other factors

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Definitions:

Labor Deepening

An increase in the investment made in the education and training of the workforce, leading to a more skilled labor force.

Education Level

A measurement of the highest degree of schooling or training a person has completed.

Capital-labor Ratio

A ratio that measures the amount of capital available per unit of labor in the production process.

Labor Productivity

The measure of economic performance that indicates the amount of goods and services produced by one hour of labor.