Theoretical Capacity Refers to

question 12

Multiple Choice

Theoretical capacity refers to

• A)the actual activity level at which a business is operating.
• B)the maximum productive output possible for a business.
• C)an output level that allows for normal work stoppages.
• D)the operating capacity that will meet expected sales demand.

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Definitions:

Par Value

The face value of a stock or bond, representing the nominal or dollar value assigned when issued.

Debentures

A type of long-term debt instrument unsecured by physical assets or collateral, relying on the creditworthiness and reputation of the issuer.

Pledged As Collateral

Assets that are offered as security for the repayment of a loan, where the lender has the right to take possession of the assets if the borrower defaults on the loan obligations.

Present Values

The monetary value now of a future lump sum or cash flow series, taking into account a particular rate of return.