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Which of the Following Ratios Is Not a Measure of Long-Term

question 44

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Which of the following ratios is not a measure of long-term solvency risk?


Definitions:

Perpetual Inventory

A method of accounting for inventory that records the sale or purchase of inventory immediately through the use of computerized point-of-sale systems and enterprise asset management software.

Retail Inventory Method

An accounting method used to estimate the ending inventory balance of a retail store by applying a cost-to-retail price ratio to the sales for the period.

Balance Sheet

A financial statement that provides a snapshot of a company's financial position, including assets, liabilities, and shareholders' equity at a specific point in time.

Gross Profit Method

An inventory estimation technique that uses the historical gross profit margin to estimate the cost of goods sold and ending inventory.

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