Company Which Borrows $1 Million Long-Term and Invests the Proceeds

question 52

True/False

Company which borrows $1 million long-term and invests the proceeds in inventory will see a $1 million increase in its net working capital.

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Definitions:

Lowest Price

The minimum cost at which a product or service is offered in the market.

Short Run

A period of time in economics during which at least one input, usually capital, is fixed and cannot be changed.

Efficient Output

The level of production at which a company or economy can produce the maximum amount of goods and services with the least waste of resources.

Profitable Output

The level of production at which a business or economic activity generates revenue that exceeds its operational costs.