The Lowest Purchase Price of an Item May Be Important

question 26

True/False

The lowest purchase price of an item may be important in the short run for supply management but may cause increased costs somewhere else in the production system over the long run.

---

Definitions:

Accounts Receivable Turnover

A financial ratio indicating how many times a company's accounts receivable are collected during a period, reflecting the efficiency of credit policies and collection efforts.

Financial Information

Data and facts related to the monetary performance and position of an entity, including revenues, expenses, assets, and liabilities.

Debt Ratio

A financial ratio that measures the proportion of a company's total debt to its total assets.

Balance Sheet

A report showing a firm's holdings, debts, and owner's equity on a certain date.