A Toy Store Does Not Pay for Its Purchases of Toys

question 75

Multiple Choice

A toy store does not pay for its purchases of toys from manufacturers until one month later.Suppose that in October it starts to stock up in anticipation of a surge in toy sales in December,when is it most likely to have a negative operating cash flow?

• A) It should never have a negative operating cash flow as long as its business is profitable.
• B) In October because this is when it starts to stock up.
• C) In November because this is when it will need to pay for the increased inventory.
• D) In December because this is when the toys will start to move off the shelves.

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Definitions:

Contaminated Soil

Soil that has been polluted by hazardous substances, rendering it toxic to humans, animals, or plants.

Thermodynamics

The branch of physics that deals with the relationships between heat and other forms of energy, and the laws governing the conversion of heat into work.

Energy

The capacity to do work or produce change, existing in various forms such as kinetic, potential, thermal, and chemical energy.