The product life-cycle concept from microeconomics and marketing provides useful insights into the relations between cash flows from operating, investing, and financing activities.When a product matures
A)net income usually reaches a peak.
B)working capital declines.
C)operations generate negative cash flow.
D)all of the above.
E)none of the above.

Question

Quizplus · Accepted Answer

When a product matures, net income usually reaches a peak. This is because the product has reached its maximum potential in terms of sales and revenue, and the company may not need to invest as much in research and development. This results in higher profits and a larger net income. However, working capital may decline as the company may not need to maintain as much inventory or accounts receivable. Operations may also generate negative cash flow if there are significant investments in new products or expansion plans. Therefore, option D is incorrect and options B and C are partially correct.

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