A Low Accounts Payable to Net Sales Ratio May Indicate

question 95

True/False

A low accounts payable to net sales ratio may indicate that a firm's suppliers grant liberal credit terms.

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Definitions:

Ending Inventory

Refers to the total value of goods available for sale at the end of an accounting period, not yet sold.

Lower-of-Cost

A principle requiring that inventory is recorded at the lower cost between its original purchase price and its current market price.

Market Inventory

The total quantity of goods available for sale in the market.

Overstated Inventory

An inventory valuation that is higher than the actual inventory level, which can misrepresent financial health.