Assume That During the Year, the Grey Company Had Net

question 68

Multiple Choice

Assume that during the year, the Grey Company had net income of $300,000. Its inventory increased by $6,000 and its accounts payable decreased by $7,000. Based on this information, net operating cash flows for the year equal

• A) 287000
• B) 299000
• C) 301000
• D) 313000

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Definitions:

Normal Return

The minimum profit necessary for a company to remain competitive in the market, often covering the cost of capital.

Fixed Costs

Costs that do not vary with the level of production or sales, such as rent, salaries, and loan payments.

Variable Costs

Costs that change in relation to the level of goods or services produced, such as materials and labor, in contrast to fixed costs.

Total Revenue

The total income generated from the sale of goods or services before any expenses are subtracted.