The product life-cycle concept from microeconomics and marketing provides useful insights into the relations among cash flows from operating, investing, and financing activities.During the _____, net income usually reaches a peak, and working capital stops growing.Operations generate positive cash flow, enough to finance expenditures on property, plant, and equipment.Capital expenditures usually maintain, rather than increase, productive capacity.Firms use the excess cash flow to repay borrowing from the introduction and growth phases and to begin paying dividends to shareholders.
A)introduction phase
B)growth phase
C)mature phase
D)late maturity phase
E)decline phase

Question

Quizplus · Accepted Answer

The description given matches the characteristics of the mature phase in the product life cycle. During this phase, net income stabilizes and working capital stops growing. Positive cash flow from operations is generated, which is enough to finance capital expenditures that maintain the productive capacity. Excess cash flow is usually used to repay borrowing and to pay dividends to shareholders.

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