It Is More Useful to Compare a Company's Inventory Turnover

question 54

Multiple Choice

It is more useful to compare a company's inventory turnover with its own results from prior periods than with the results of other companies:

• A)because companies may use different accounting methods which may cause the turnovers to vary significantly.
• B)because larger companies' ratios are not comparable with smaller companies' ratios.
• C)on extremely rare occasions.Little information can be gleaned from comparing a company's current and prior period results.
• D)because knowing the results of other companies does not help you manage or evaluate the company in which you are interested.

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Definitions:

Flotation Cost

The total costs associated with issuing new securities, including underwriting, legal, and registration fees.

Issue Price

The initial price at which securities are offered to the public.

Annual Dividend

The total dividend payment a shareholder receives from a company over the course of a year, often expressed as a per share amount.

Flotation Cost

Flotation cost is the total cost incurred by a company in offering its securities to the public for sale, including underwriting, legal, and registration fees.