All of the Following Statements About Business Objectives in Designing

question 14

Multiple Choice

All of the following statements about business objectives in designing a rating system are true EXCEPT

• A)The rating system should encourage loss control activities.
• B)The rating system should be independent of long-run changes in economic conditions.
• C)The rating system should be simple to understand.
• D)The rating system should be stable over short periods so that consumer satisfaction can be maintained.

Comprehend the calculation of the cash cycle and its importance in corporate finance.

Learn how to calculate the accounts receivable period.

Understand how inventory management and turnover rates impact the operating cycle.

Determine the impact of changes in inventory, receivables, and payables periods on the operating and cash cycles.

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Definitions:

Physical Flow

The movement and processing of physical goods through the supply chain from raw materials to finished products.

Ending Inventory Value

The total value of all unsold inventory remaining at the end of an accounting period.

Average Cost Method

Uses the weighted average unit cost of the goods available for sale for both cost of goods sold and ending inventory.

Cost of Goods Sold

Direct expenditures involved in producing the merchandise a business sells.