The adjustment for changes in operating working capital accounts depends in part on a firm's rate of growth._____ firms usually experience significant increases in accounts receivable and inventories.
A)Introduction phase
B)Late maturity
C)Declining
D)Mature
E)Rapidly growing

Question

Quizplus · Accepted Answer

Rapidly growing firms usually experience significant increases in accounts receivable and inventories due to increased sales and production. This necessitates an adjustment for changes in operating working capital accounts when calculating the firm's cash flows. In contrast, firms in the introduction phase may have low or no sales, while declining and mature firms may experience stagnant or decreasing sales, resulting in less need for adjustments to working capital accounts.

The Adjustment for Changes in Operating Working Capital Accounts Depends