Which Term Is Used for a Cost That Relates to All

question 27

Multiple Choice

 Which term is used for a cost that relates to all errors not detected and not corrected before delivery to the customer?

• A) prevention cost
• B) appraisal cost
• C) internal failure cost
• D) external failure cost

Determine the significance of the accounts receivable turnover in managing receivables.

Calculate and interpret the times interest earned ratio to assess interest payment capacity.

Understand operating cycle calculations to manage cash flow effectively.

Evaluate the equity multiplier to understand the level of financial leverage.

---

Definitions:

Return on Stockholders' Equity

A financial ratio that measures the profitability of a corporation in relation to stockholders' equity, indicating how effectively equity is used to generate profits.

Asset Management Ratios

Those ratios—accounts receivable turnover, average collection period, inventory turnover, and asset turnover—which measure how effectively a company uses its assets.

Company's Ability

A broad concept referring to a business's capacity to execute its strategies and achieve its objectives effectively.

Gross Profit Rate

A financial metric that indicates the percentage of revenue that exceeds the cost of goods sold. It helps to assess the efficiency of a company in managing its production costs.