Which of the Following Firms Would Be Expected to Need

question 35

Multiple Choice

Which of the following firms would be expected to need the most cash to conduct its daily operations?

• A)a retail grocery store that sells on a cash only basis
• B)an airline that has many of its fares prepaid by cash or credit card
• C)an electronics manufacturer that only assembles its goods once they have been paid for
• D)an aircraft manufacturer with large inventory and long development and sales cycles

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Definitions:

Minimum Required Rate

The lowest rate of return considered acceptable by investors for investing in a financial instrument, based on risk and alternative opportunities.

Average Operating Assets

An average value of the assets used in the regular operations of a business over a specific period.

Net Operating Income

A measure of a company's profitability, calculated as the difference between its total revenue and operating expenses, excluding taxes and interest.

Return On Investment

A financial ratio used to calculate the profitability of an investment, comparing the gain from an investment relative to its cost.