The Inventory Turnover Ratio Is Calculated by Dividing Cost of Goods

question 45

Multiple Choice

The inventory turnover ratio is calculated by dividing cost of goods sold by

• A) beginning inventory.
• B) 365 days.
• C) ending inventory.
• D) average inventory.

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Definitions:

Fixed Charge Coverage Ratio

This ratio measures a company's ability to cover its fixed charges, such as interest and leases, with its earnings before interest and taxes.

EBITDA

Earnings Before Interest, Taxes, Depreciation, and Amortization, a measure of a company's overall financial performance.

Loan Agreements

Contracts between a borrower and a lender outlining the terms and conditions of a loan.

Net Income

Net income is the total profit of a company after all expenses, including taxes and costs, have been subtracted from total revenue.