Inventory-Carrying Costs Represent Substantial Dollars for Manufacturers

question 42

Multiple Choice

Inventory-carrying costs represent substantial dollars for manufacturers.These inventory-carrying costs include storage charges,cost of capital,taxes and insurance,and depreciation and obsolescence.Carrying costs might run as high as ________ of the value of the inventory.

• A) 70%
• B) 40%
• C) 25%
• D) 30%
• E) 50%

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Definitions:

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock, usually with fixed dividends.

Common Stock

Equities, or equity securities, issued as ownership shares in a publicly held corporation. Shareholders have voting rights and may receive dividends based on their proportionate ownership.

Dividends

Payments made by a corporation to its shareholder members. It is the portion of corporate profits paid out to stockholders.

ROE

Equity Return, which is determined by dividing the net income by the equity of shareholders, is a method used to evaluate financial success.