Foundations of Financial Management Study Set 6
Quiz 6: Working Capital and the Financing Decision
When Using Level Production, Inventory Will Peak in the Month
When using level production, inventory will peak in the month where unit sales trend above the production level.
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Cash, accounts receivables, and inventory all move monthly in the same direction under level production.
During an economic "boom" period, a shortage of low-cost financing alternatives exists.
The ratio of long-term financing to short-term financing at any point in time will be greatly influenced by the term structure of interest rates and common stock prices.
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