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:

Least Squares

A mathematical method used to find the best-fitting line through a set of points by minimizing the sum of the squares of the distances from the points to the line.

Regression Line

A straight line that best fits the data points on a scatter plot, showing the relationship between two variables.

Models

Replicas or systems that represent, simulate, or describe complex phenomena for the purpose of analysis or prediction.

Model Significant

Refers to the degree to which a statistical model's parameters are meaningful and impactful for understanding the data.