Increased Needs for Net Working Capital Are

question 23

Multiple Choice

Increased needs for net working capital are:

• A)Recognized in pro forma balance sheets
• B)Absorbed into the pro forma plug figures
• C)Typically financed with debt
• D)Ignored due to their great variability

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Definitions:

Variable Costs

Expenditures that fluctuate in accordance with the amount of products made or sold.

Inventoriable Costs

Expenses directly connected to the production of goods that are initially recorded as inventory and expensed as cost of goods sold when the goods are sold.

Manufacturing Overheads

All indirect costs associated with the production process, including utilities, maintenance, and factory management salaries.

Period Costs

Expenses that are not directly tied to production activities, often including selling, general, and administrative expenses.