A Low Number of Days in Inventory May Indicate All

question 56

Multiple Choice

A low number of days in inventory may indicate all of the following except

• A)Sales opportunities may be lost because of inventory shortages.
• B)There is less chance of having obsolete inventory items.
• C)The company has fewer funds tied up in inventory.
• D)Management has achieved the best balance between too much and too little inventory levels.

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Definitions:

Total Retained Earnings

The accumulation of a company's net earnings not distributed to shareholders, reinvested in the business.

Book Value Per Share

A financial measure that calculates the per-share value of a company based on its equity available to shareholders.

Par Value Per Common Share

The nominal or face value of a common stock as stated in the corporate charter.

Control Account

An account used to summarize and control the total of individual subsidiary ledger accounts, such as accounts receivable or accounts payable, facilitating the integrity of financial information.