Waters Department Store Had Net Credit Sales of €16,000,000 and Cost

question 71

Multiple Choice

Waters Department Store had net credit sales of €16,000,000 and cost of goods sold of €10,000,000 for the year. The average inventory for the year amounted to €2,000,000. The average number of days in inventory during the year was

• A) 91 days.
• B) 73 days.
• C) 46 days.
• D) 37 days.

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Definitions:

Effective Interest Rate

The actual cost of borrowing or the actual return on investment, taking into account the effect of compounding interest as opposed to the nominal rate.

Amortization

The gradual reduction of a debt over a period of time by periodic payments of principal and interest sufficient to repay the loan by maturity.

Times Interest Earned Ratio

A financial metric that measures a company's ability to meet its debt obligations by comparing its income before interest and taxes (EBIT) to its interest expenses.

Bonds Payable

represent long-term debt securities issued by corporations or governments, obligating the issuer to pay the bondholder the principal plus interest.