Costs That Rise with Increases in the Level of Investment

question 7

Multiple Choice

Costs that rise with increases in the level of investment in current assets are called:

• A) capital costs.
• B) carrying costs.
• C) commitment costs.
• D) liquid capital costs.
• E) short-term capital costs.

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Definitions:

Turnover

The rate at which a company's goods are sold and replaced, or an employee's leaving and being replaced.

Return on Investment

A measure of the profitability of an investment, calculated by dividing the net profit by the initial cost of the investment.

Total Sales

The sum of all sales (revenue) generated by a business within a specific period, reflecting the volume or value of all units sold.

Operating Data

Information related to the day-to-day functions of a business, which includes sales, production volumes, and inventory levels, used to support operational decision-making.