The Three Elements of Risk That Help in Understanding Differences

question 84

Multiple Choice

The three elements of risk that help in understanding differences across firms and changes over time in ROAs are:

• A) product life cycles, cyclicality of sales, competitive constraint.
• B) operating leverage, cyclicality of sales, product life cycles.
• C) cyclicality of sales, competitive constraint, operating leverage.
• D) operating leverage, competitive constraint, product life cycles.

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Definitions:

LIFO

LIFO (Last In, First Out) is an inventory costing method where the most recently produced or purchased items are the first to be expensed.

Balance Sheet

A financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time, providing insight into financial health.

Gross Profit Method

An accounting technique used to estimate inventory levels and cost of goods sold by applying a consistent gross profit percentage to sales figures.

Retail Method

An inventory accounting method used in retail, estimating the ending inventory value based on the relationship between cost and retail price.