ing inventories 3. When an entity's net working capital is negative, current liabilities exceed current assets. 4. Entities would prefer to convert inventories to cash the fastest way possible. 5. Working capital management is critical in every organization. 6. At the economic order quantity, carrying costs exceed ordering costs. 7. The higher the firm's current assets, the higher the profitability and the higher the risk. 8. The reorder point is measured as the lead time in order processing multiplied by daily inventory usage. 9. A firm's choice in the level of its working capital reflects its risk preference. 10.A safety stock prevents the occurrence of stock outs. 206
ing inventories 3. When an entity's net working capital is negative, current liabilities exceed current assets. 4. Entities would prefer to convert inventories to cash the fastest way possible. 5. Working capital management is critical in every organization. 6. At the economic order quantity, carrying costs exceed ordering costs. 7. The higher the firm's current assets, the higher the profitability and the higher the risk. 8. The reorder point is measured as the lead time in order processing multiplied by daily inventory usage. 9. A firm's choice in the level of its working capital reflects its risk preference. 10.A safety stock prevents the occurrence of stock outs. 206
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Transcribed Image Text:ahagers prefer lower inventory quantities since costs
are associated with carrying inventories
3. When an entity's net working capital is negative, current liabilities
exceed current assets.
4. Entities would prefer to convert inventories to cash the fastest
way possible.
5. Working capital management is critical in every organization.
6. At the economic order quantity, carrying costs exceed ordering
costs.
7. The higher the firm's current assets, the higher the profitability
and the higher the risk. wans
8. The reorder point is measured as the lead time in order processing
multiplied by daily inventory usage.
9. A firm's choice in the level of its working capital reflects its risk
preference.
10.A safety stock prevents the occurrence of stock outs.
ost-activity
irections: Answer the following questions briefly. Points will be based on the given
rubrics.
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