How Would You Interpret an Inventory Turnover Ratio of 10

question 85

Multiple Choice

How would you interpret an inventory turnover ratio of 10.7?

• A)it takes 50 days on average to collect receivables.
• B)inventory is converted into sales every 50 days.
• C)the firm has sufficient inventories to maintain sales for 34.1 days.
• D)assets are converted into sales every 50 days.

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Definitions:

Maintenance-Margin

The minimum amount of equity that must be maintained in a margin account to continue holding positions, preventing a margin call.

Margin Call

A demand by a broker that an investor deposits further cash or securities to cover possible losses.

Margin Deposit

A margin deposit is an initial sum deposited to cover potential losses when borrowing capital for investing, typically in a margin account for trading securities.

Open Interest

The number of futures contracts outstanding.