A Firm Following a Conservative Approach to Working Capital Policy

question 21

Multiple Choice

A firm following a conservative approach to working capital policy will finance __________ of the fixed assets,__________ of the permanent current assets,and __________ of temporary current assets are financed with long term capital.

• A) all; some; none
• B) none; all; all
• C) all; none; none
• D) all; all; some
• E) some; all; all

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Definitions:

Labor-Intensive

A type of production process or industry that requires a large amount of labor to produce goods or services, in comparison to capital.

Economic Costs

The total expenses incurred in production, including both explicit costs like wages and implicit costs such as opportunity costs.

Total Revenue

Total Revenue refers to the total receipts from sales of goods or services.

Economic Profit

The profit a business makes after deducting both its explicit and implicit costs, including opportunity costs.