Which of the Following Statements Is Best About Inventory Management

question 3

Multiple Choice

Which of the following statements is best about inventory management?

• A) inventories and production can be managed separately
• B) inventory is not important at the production planning level
• C) inventories are usually insignificant on the balance sheet
• D) all the above are true
• E) none of the above is true

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Definitions:

Plowback Ratio

Also known as the retention rate, it measures the proportion of earnings that a company retains and reinvests in its operations rather than paying out as dividends.

Debt-equity Ratio

The ratio that exhibits the financing divide between debt and equity for company assets.

Sustainable Growth Rate

The maximum rate at which a company can grow its revenues and earnings without increasing financial leverage, often calculated using ROE and the dividend payout ratio.

Shareholders' Equity

Shareholders' Equity is the residual interest in the assets of a corporation after deducting its liabilities, essentially representing ownership equity.