The Effects of a Change in Sales on Working Capital

question 103

Multiple Choice

The effects of a change in sales on working capital will be seen in which section of a financial plan?

• A) Output section
• B) Pro forma financial statements
• C) Planning model
• D) Sources and uses of funds

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Definitions:

Risk Level

The degree of uncertainty and potential financial loss involved in an investment decision.

Real Rate of Return

The annual percentage return realized on an investment, adjusted for changes in the price level due to inflation or other external effects.

Nominal Rate

The stated interest rate of a financial instrument, not adjusted for inflation or other factors that affect its true cost or yield.

Inflation Rate

The rate at which the general level of prices for goods and services is rising, thus eroding purchasing power.