The Goal of Managing Working Capital, Such as Inventory, Should

question 1

Multiple Choice

The goal of managing working capital, such as inventory, should be to minimize the:

• A) costs of carrying inventory.
• B) opportunity cost of capital.
• C) aggregate of carrying and shortage costs.
• D)amount of spoilage or pilferage.

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Definitions:

Overnight Loans

Short-term loans that banks borrow from each other to meet reserve requirements, which must be repaid within one business day.

Municipal Bonds

Tax-exempt bonds issued by state and local governments. General obligation bonds are backed by the general taxing power of the issuer. Revenue bonds are backed by the proceeds from the project or agency they are issued to finance.

Debt Obligation

A commitment to repay borrowed money, typically in the form of loans or bonds, with specific terms and interest rates.