Inventory Ratios Can Be Used to Measure How Effectively a Company

question 109

True/False

Inventory ratios can be used to measure how effectively a company manages its inventory.

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Definitions:

Double-Declining-Balance

A method of accelerated depreciation where an asset's book value is decreased at double the rate of its straight-line depreciation.

Residual Value

It's the estimated value that an asset will realize upon its sale at the end of its useful life, after depreciation has been taken into account.

Depreciable Cost

The amount of an asset’s cost that will be allocated to depreciation expense over its useful life, determined by the difference between the asset’s initial cost and its residual value.

Acquisition Cost

The total cost incurred to acquire an asset or service, including purchase price and all other expenses related to acquisition.