The product life-cycle concept from microeconomics and marketing provides useful insights into the relations among cash flows from operating, investing, and financing activities.The _____ phase reflects sales of successful products, and net income turns positive.The firm makes more sales, but it also needs to acquire more goods to sell.Because it usually must pay for the goods it acquires before it collects for the goods it sells, the firm finds itself often short of cash from operations.The faster it grows (even though profitable), the more cash it needs.Banks do not like to lend for such needs.They view such needs (even though for current assets) as a permanent part of the firm's financing needs.Thus, banks want firms to use shareholders' equity or long-term debt to finance growth in nonseasonal inventories and receivables.
A)introduction
B)growth
C)mature
D)late maturity
E)decline

Question

Quizplus · Accepted Answer

The phase described in the passage reflects the growth phase of the product life cycle, which is characterized by increasing sales and profitability. However, as the firm grows, it requires more cash to finance its operations, and banks may be hesitant to lend for such needs. Therefore, the firm may need to rely on shareholders' equity or long-term debt to finance non-seasonal inventory and receivables growth.

The Product Life-Cycle Concept from Microeconomics and Marketing Provides Useful