Cash Flow from Operations Is Especially Important for Those Firms

question 7

True/False

Cash flow from operations is especially important for those firms that are heavily invested in inventories and use accounts receivables and accounts payables as a major part of business operations.

---

Definitions:

Variable Production Costs

Costs that vary directly with the level of production output, such as raw materials and labor costs.

Sales Commissions

Fees paid to sales representatives as a percentage of the sales they generate.

Traceable Fixed Advertising

Fixed advertising costs that can be directly linked to a specific product, segment, or area of the business.

Contribution Margin

The difference between sales revenue and variable costs of a product or service, used to cover fixed costs and generate profit.