ABC Inventory Classification

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Questions and Answers

It is a perspective that is summarized in a firm’s statement of cash flows.

ACCOUNTING

It is the length of time required for a company to convert cash invested in its

CASH CONVERSION CYCLE

It is an inventory management technique that divides inventory into three groups.

ABC

It is interest that is earned on a given deposit and becomes part of the principal at the end of a specified period.

<p>COMPOUND</p> Signup and view all the answers

It is the primary ingredient in any financial valuation model.

<p>CASHFLOW</p> Signup and view all the answers

It is the portion of the costs of fixed assets charged against annual revenues over time.

<p>DEPRECIATION</p> Signup and view all the answers

It is a stream of equal periodic cash flows over a specified period.

<p>ANNUITY</p> Signup and view all the answers

It involves the preparation of the firm’s cash budget

<p>CASH PLANNING</p> Signup and view all the answers

It is the process of finding present values and the inverse of compound interest

<p>DISCOUNTING</p> Signup and view all the answers

It is a perspective from which firms often focus on both operating and free cash flow.

<p>FINANCIAL</p> Signup and view all the answers

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Study Notes

Financial Concepts

  • A firm's statement of cash flows is a perspective that summarizes the company's financial situation.

Inventory Management

  • The technique of dividing inventory into three groups is an inventory management method.

Compound Interest

  • Compound interest is the interest earned on a deposit that becomes part of the principal at the end of a specified period.

Financial Valuation

  • The primary ingredient in any financial valuation model is the cost of capital.

Depreciation

  • Depreciation is the portion of the costs of fixed assets charged against annual revenues over time.

Annuity

  • An annuity is a stream of equal periodic cash flows over a specified period.

Cash Budgeting

  • The cash budget is prepared by firms, which involves planning and managing a company's cash inflows and outflows.

Time Value of Money

  • The process of finding present values and the inverse of compound interest is involved in understanding the time value of money.

Cash Flow Perspective

  • Firms often focus on both operating and free cash flow in their financial planning and decision-making.

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