Many Times an Analyst Will Compute Ending Accounts Receivable or Inventory

question 59

Essay

Many times an analyst will compute ending accounts receivable or inventory balances using turnover ratios.Discuss the advantage and disadvantage of using this methodology.

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Definitions:

AVC

Average Variable Cost, the total variable costs divided by the quantity of output produced.

ATC

Average Total Cost; the total cost per unit of output, calculated by dividing the total cost by the quantity of output produced.

Average Cost

The total cost of production divided by the number of units produced, indicating the cost per unit of output.

Output Values

The results or final products generated from a process, system, or activity.