Inventory Turned Over Seven Times During the Year at Rockdale

question 30

Multiple Choice

Inventory turned over seven times during the year at Rockdale Electronics. Similar electronics retailers have an inventory turnover equal to twelve times per year. Which of the following best explains the state of Rockdale's inventory management?

• A)The company sold too much inventory during the year.
• B)The company needs to increase sales and decrease the amount of inventory on hand.
• C)The company is performing much better than its competitors.
• D)The company should increase the amount of goods on hand to accommodate the growth in inventory demand.

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Definitions:

Discount Rate

The interest rate used to discount future cash flows to their present value, often used in investment appraisal and capital budgeting.

Wilderness Campgrounds

Designated camping areas within natural, undeveloped landscapes, often in national parks or forests, where people can camp with minimal facilities, emphasizing an experience close to nature.

Estimated Value

An appraisal of the worth of something, such as an asset or a company, based on available data but subject to adjustments as more information becomes available.

Discount Rate

The interest rate charged to commercial banks and other depository institutions for loans received from a country's central bank's discount window; also the rate used to discount future cash flows in discounted cash flow analysis.