In Which of the Following Cases Will a Cash Investment

question 48

Multiple Choice

In which of the following cases will a cash investment in net working capital be most likely?

• A) Inventory levels will be reduced when the project is introduced.
• B) All sales related to the project will be cash sales to a subsidiary.
• C) The project will increase inventory more than accounts payable.
• D) The project will require additional inventory which will be financed by a supplier.

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Definitions:

Marginal Revenue

The additional income generated from selling one more unit of a good or service.

Average Variable Cost

The total variable cost divided by the quantity of output produced; it represents the variable cost per unit of output.

Marginal Revenue

The additional income earned from selling one more unit of a good or service, a key factor in decision-making for producing additional units.

Marginal Revenue

The extra revenue earned by selling an additional unit of a product or service.