Which of the Following Is Calculated by Dividing Cost of Goods

question 16

Multiple Choice

Which of the following is calculated by dividing cost of goods sold by average inventory and then dividing this result into 365 days?

• A) Profit margin ratio.
• B) Current ratio.
• C) Days to collect ratio.
• D) Days to sell ratio.

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Definitions:

Operating Expenses

Costs associated with the day-to-day functions of a business that are not directly tied to production.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting liabilities, also known as shareholders' equity.

Balance Sheet

A financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time, showing the balance of income and expenditure over the preceding period.

Assets Decrease

Assets decrease refers to a reduction in the total value of a company’s assets, which can result from factors like asset sales, depreciation, or impairments.