Broke Inc Is Experiencing a Cash Flow Problem Finding That

question 102

Multiple Choice

Broke Inc is experiencing a cash flow problem finding that its cash decreases, even though net income increases. Which of the following is/are a possible reason(s) ?

• A)Lag between cash expenditures incurred in producing goods and cash collections from customers once the firm sells those goods.
• B)The firm must generally produce more units than it sells during a period of growth if it is to have sufficient quantities of inventory on hand for future sales.
• C)Cash needed for a higher level of production exceeds the cash received from the prior period's sale.
• D)all of the above
• E)none of the above

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Definitions:

Marginal Benefit

The extra utility or satisfaction that is derived from the consumption or manufacture of one more unit of a good or service.

Marginal Cost

The growth in complete cost caused by the manufacture of one more unit of a good or service.

Artificially Scarce Good

A product or service whose availability is limited due to artificial constraints, such as legal restrictions or monopolistic practices, rather than natural scarcities.

Competitive Market

A market structure where many firms offer products or services that are similar, allowing consumers to find substitutes easily.