Which of the Following Statements About Inventory Turnover Analysis Is

question 73

Multiple Choice

Which of the following statements about inventory turnover analysis is not correct?

• A)In making comparisons of financial statements,it is desirable to compare data calculated using the same inventory costing methods.
• B)The inventory turnover ratio and days to sell measure will be affected by the cost flow assumptions used,which causes problems for financial statements users.
• C)Inventory turnover also can vary significantly between companies within the same industry.
• D)The inventory turnover and days to sell ratios are consistent among companies in different industries.

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Definitions:

Mutually Exclusive

Decisions or events that cannot occur at the same time, implying that the selection of one precludes the selection of another.

Pay Back

The time period required for an investment to generate cash flow sufficient to recover its initial cost.

Cash Flows

The total amount of money being transferred into and out of a business, especially considered as affecting liquidity.

Shareholder Wealth

The total value of shares held by investors in a company, often used as a measure of company’s financial health and management performance.