Which of the Following Statements Is Correct

question 4

Multiple Choice

Which of the following statements is correct?

• A) If a firm has a very high fixed asset turnover, it means that the firm may be nearing its maximum production capacity.
• B) An extremely low average collection period will maximize net income.
• C) In general, a firm should strive for a high average payment period because it wants to pay for its purchases as quickly as possible.
• D) All of these choices are correct.

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Definitions:

Average Cost (AC)

The total cost of production divided by the quantity of output produced, representing the per unit cost.

Marginal Revenue

This refers to the additional income generated from the sale of one more unit of a good or service.

Average Cost

the total cost of production divided by the number of units produced, used to evaluate the efficiency of production processes.

Producing Units

Departments or entities within an organization responsible for the creation of goods or provision of services.