A Firm with a Stockturn Rate of 5 Sells Products

question 14

Multiple Choice

A firm with a stockturn rate of 5 sells products that cost it $100,000. Its annual inventory carrying cost is about 20 percent of the inventory value. What is its annual inventory carrying cost?

• A) $5,000
• B) $4,000
• C) $8,000
• D) $20,000
• E) $100,000

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Definitions:

Return On Investment

A financial metric used to evaluate the efficiency of an investment, calculated as the net profit divided by the initial cost of the investment.

Invested Assets

Assets, including both equity and debt investments, that are held by an entity for earning returns or dividends.

Income From Operations

The profit generated from a business's regular core business operations, excluding any investment and financing activities.

Locomotive Division

A specialized business unit within a company that focuses on the design, manufacture, or maintenance of locomotives and related equipment.