As a Firm's Cash Conversion Cycle Increases, the Firm

question 27

Multiple Choice

As a firm's cash conversion cycle increases, the firm:

• A)becomes less profitable
• B)increases its investment in working capital
• C)reduces its accounts payable period
• D)incurs more shortage costs

---

Definitions:

Production Function

An economic model that describes the relationship between inputs used in production and the output of goods or services.

Marginal Cost

The extra expense associated with manufacturing an additional unit of a product or service.

Variable Cost

Expenses that fluctuate based on the level of production or the amount of output.

Total Cost

The complete cost of producing a specific quantity of output, including both fixed and variable costs.