The Length of the Operating Cycle Equals the Days' Sales

question 11

Multiple Choice

The length of the operating cycle equals the days' sales uncollected plus the

• A)days' payable.
• B)days' inventory on hand.
• C)receivable turnover.
• D)payables turnover.

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Definitions:

Profit-Maximizing Output

The level of production at which a business achieves the highest possible profit, balancing costs against revenues.

Cost Function

A mathematical relation that describes how production costs vary with changes in the quantity of output produced.

Profit-Maximizing Output

The quantity of production that generates the highest possible profit for a firm, determined by the intersection of marginal cost and marginal revenue.

Price Equals Marginal Cost

This principle suggests that in a competitive market, firms set prices equal to their marginal cost of production, achieving economic efficiency.