Some Capital Budgeting Projects Contain Real Options in That They

question 39

True/False

Some capital budgeting projects contain real options in that they provide opportunities to obtain or eliminate specified real assets such as machinery or a manufacturing plant.

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Definitions:

Accounts Payable Period

The average duration it takes for a company to pay off its suppliers after receiving goods or services.

Accounts Receivable Period

The mean duration that a company requires to receive payments from credit sales, reflecting the effectiveness of its policies on credit and collections.

Operating Cycle

The period of time between the acquisition of inventory by a company and the receipt of cash from accounts receivable from the sale of that inventory.

Inventory Period

The time it takes for a company to turn its inventory into sales.