Inventory Is Particularly Sensitive to Changes in Business Activity

question 53

True/False

Inventory is particularly sensitive to changes in business activity.Therefore,management should keep inventory at a minimum.

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Definitions:

Internal Rate

Often refers to internal rate of return (IRR), a financial metric used to estimate the profitability of potential investments.

Cash Inflows

The money received by a business from its various sources during a specific period, such as sales revenue, investments, and financing.

Operating Costs

The expenses associated with the day-to-day functioning of a business, including salaries, utilities, and rent.

Useful Life

The expected period over which a fixed asset is anticipated to be usable by the company.