An Aggressive Working Capital Policy Would Include

question 99

Multiple Choice

An aggressive working capital policy would include:

• A)using short term financing to finance only the peak temporary working capital.
• B)using short term financing to finance all temporary working capital.
• C)using short term financing to finance all temporary and some permanent working capital.
• D)both a. and b. above describe aggressive working capital policies.
• E)All of the above describe aggressive working capital policies.

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Definitions:

Contribution Format Income Statement

An income statement format that separates variable and fixed costs, making it easier to see the contribution margin.

Contribution Margin

The revenue remaining after deducting variable costs, which contributes to covering fixed costs and generating profit.

Direct Manufacturing Cost

Expenses directly associated with the production of goods, including direct materials and direct labor costs.

Indirect Manufacturing Cost

Costs related to production that are not directly tied to a specific product, such as maintenance, supervision, and utilities.