The Inventory Days Ratio Measures

question 67

Multiple Choice

The inventory days ratio measures:

• A)the average length of time it takes a company to sell its inventory.
• B)the average length of time it takes the company's suppliers to deliver its inventory.
• C)the level of sales required to keep a company's average inventory on the books.
• D)the percentage change in inventory over the past year.

Recognize the advantages and assumptions of activity-based costing approach in CVP analysis.

Calculate the desired sales mix to achieve a target profit or break-even point.

Identify the general assumptions underlying cost volume profit analysis and their implications.

Understand the concept and calculation of the weighted average unit contribution margin.

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Definitions:

Equilibrium Price

The price at which the quantity of a good or service supplied matches the quantity demanded, causing the market to be in a state of balance.

Equilibrium Price

The price at which the quantity of a good or service demanded equals the quantity supplied, leading to a stable market condition without excess supply or demand.

Supply and Demand

Fundamental economic model describing how the price and quantity of a good are determined in a market, based on the relationship between product availability and consumers' desire for it.

Determinant of Demand

A factor that affects the willingness and ability of consumers to buy a product, which can include price, income, tastes, and expectations.