Static Inventory Models Are Best Explained by

question 83

Multiple Choice

Static inventory models are best explained by

• A)how much to order in a one-shot decision.
• B)how much to order in a fixed amount as required repetitively over a long time.
• C)maintaining stock on-hand for every practical reason that materials are needed.
• D)ordering additional stock to prevent outages arising from unexpected demands.

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Definitions:

Working Capital

The difference between a company's current assets and its current liabilities, indicating the liquidity available to run its operations.

Current Ratio

A measure of a business's capacity to cover its short-term liabilities, found by the ratio of current assets to current liabilities.

Acid-Test Ratio

A strict metric used to assess if a business possesses sufficient current assets to meet its short-term obligations without the need to liquidate inventory.

Times Interest Earned

A financial metric indicating how many times a company can cover its interest obligations with its earnings before interest and taxes.