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:

Depreciation Tables

Charts provided by the IRS to assist taxpayers in calculating the depreciation expense of an asset for tax purposes over its useful life.

Four-Plex

A residential building divided into four separate units or apartments, each functioning as a separate dwelling.

Net Rental Income

The profit derived from renting out property after deducting all allowable expenses related to the rental activity.

Standard Mileage Rate

The Standard Mileage Rate is a set rate per mile established by the IRS that taxpayers can use to calculate deductible vehicle expenses for business, medical, moving, or charitable purposes.