Which One of the Following Factors Usually Calls for a LARGER

question 90

Multiple Choice

Which one of the following factors usually calls for a LARGER capacity cushion?

• A) high worker flexibility
• B) more reliable equipment
• C) high capital intensity
• D) uncertain demand

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Definitions:

Cash Cycle

The period between the outlay of cash for the purchase of inventory and the receipt of cash from accounts receivable, representing the time it takes for a company to turn its investments in inventory back into cash.

Receivables Factoring

The process of selling a business's accounts receivable to a third party at a discount to quickly generate cash.

Bad Debts

Financial amounts owed to a company that are unlikely to be paid by debtors, often recognized as an expense on the company's income statement.

Discounted Amount

The present value of a future sum of money or stream of cash flows given a specific rate, reflecting the time value of money.