Investment in Operating Capital Is

question 68

Multiple Choice

Investment in operating capital is:

• A) the change in assets plus the change in current liabilities.
• B) the change in gross fixed assets plus depreciation.
• C) the change in gross fixed assets plus the change in free cash flow.
• D) None of the options.

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Definitions:

Variable Costing

An accounting methodology that only includes variable production costs (costs that change with the level of output) in product costs.

Absorption Costing

An accounting method that includes all of the costs associated with manufacturing a product in the cost of that product.

Operating Income

Earnings before interest and taxes (EBIT), a measure of a company's profitability from its operations.

Variable Costing

An accounting method that assigns only variable production costs to products, treating fixed costs as period costs.