Most Firms Try Not to Hold More Inventory Than Necessary

question 138

True/False

Most firms try not to hold more inventory than necessary because shrinkage costs generally decrease when a firm's inventory increases.

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Definitions:

Equivalent Annual Cost

A financial metric used to compare the cost-effectiveness of different investments with different lifespans or costs.

Net Working Capital

The gap between a business's current assets and its current liabilities, showcasing the firm's liquidity.

Capital Cost Allowance (CCA)

The Capital Cost Allowance (CCA) is a tax deduction available in Canada that represents a yearly depreciation charge for capital assets used in business activities, allowing businesses to write off the cost of assets over time.

Tax Rate

The percentage at which an individual or corporation is taxed on their income or profit.