With Respect to Inventory, Which of the Following Is Correct

question 115

Short Answer

With respect to inventory, which of the following is correct?
Inventory is not an asset.
All inventory is an asset except work-in-process inventory.
Factoring inventory is generally a bad idea.
Finished goods inventory is twice the value of work-in-process inventory.
Rolls of denim at a Levi's factory are raw materials inventory.

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Definitions:

Beta

A measure of a security's or portfolio's volatility, or systematic risk, in comparison to the market as a whole.

Risk-free Rate

The risk-free rate is the theoretical return on an investment with zero risk, often represented by the yield on short-term government securities.

CAPM

Capital Asset Pricing Model; a model that describes the relationship between systematic risk and expected return for assets.

Holding Period

The duration of time an investment is held before it is sold, impacting the capital gains tax implications.