A Company That Makes Decorations for Christmas Trees Has High

question 30

Multiple Choice

A company that makes decorations for Christmas trees has high sales in its fourth quarter but very low sales during the rest of the year. It manufactures decorations steadily throughout the year, however. Which of the following is NOT a likely consequence of this scenario?

• A) The firm will need sources of short-term cash to fund inventory in the second and third quarters.
• B) The firm will see negative net cash flows in the second and third quarter.
• C) The firm will have a large short-term surplus in the fourth quarter.
• D) Accounts payables will rise from the first to fourth quarter.

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Definitions:

NAV

NAV, or Net Asset Value, represents the per-share market value of a fund's assets minus its liabilities, crucial for evaluating investment funds.

Money Market Funds

Investment funds that pool money from investors to purchase short-term, high-quality debt securities and aim to provide returns with lower risk.

Equity Funds

Mutual funds that invest primarily in stocks, aiming for growth by capital gains rather than income from dividends or interest.

Bond Funds

Investment funds that exclusively invest in bonds, offering investors exposure to the fixed income market.