CAPITAL CHARGE Definition

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CAPITAL CHARGE is a monetary amount, calculated by multiplying the money the business has tied up in capital, by the weighted average cost of capital (WACC). Capital charge is deducted from net operating profit after tax to arrive at Economic Profit.

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CASH CYCLE is the length of time, normally stated in numbers of days, between the purchase of raw materials and the collection of accounts receivable generated in the sale of the final product.

THEORETICAL USAGE, in a manufacturing environment, is the projected or budgeted usage of parts, materials or supplies as opposed to the actual usage that may occur.

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