A Danger of an Excessive Investment in Inventory for the Small

question 44

Multiple Choice

A danger of an excessive investment in inventory for the small business is:

• A)excessive inventory taxes by local and state government.
• B)minimizing reordering costs.
• C)creating too quick a turnover of inventory.
• D)tying up an excessive amount of the firm's capital.

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Definitions:

Raw Material

The basic, unprocessed inputs used in the production of goods, often transformed through manufacturing processes into finished products.

Finished Goods

Products that have completed the manufacturing process and are ready to be sold to customers.

Budgeted Net Income

An estimate of a company's net income for a future period, calculated by subtracting all expected expenses from expected revenues.

Cash Receipts

The total amount of cash collected by a business during a period from its various sources.