Use the Following Information to Answer the Question(s)below

question 19

Multiple Choice

Use the following information to answer the question(s) below:
Rearden Metal (RM) had $120 million in sales in 2019.Its cost of goods sold was $85 million,and its average inventory balance was $15 million.
-The industry average days of inventory is 75 days.The amount that Rearden would have to increase/decrease its inventory in order to match the industry average is closest to:

• A)decrease inventory by $2.2 million.
• B)increase inventory by $2.2 million.
• C)increase inventory by $2.5 million.
• D)increase inventory by $4.2 million.

---

Definitions:

Capacity

The legal capability to understand the terms of a contract and to be held accountable for its obligations, or the maximum output or production ability of a facility.

Agency Relationship

A fiduciary relationship where one party (the agent) acts on behalf of another (the principal) in dealing with third parties.

Elect to Sue

The decision taken by an individual or entity to initiate legal proceedings against another party.

Identity Discovered

The process or instance of confirming or revealing the true identity of an individual or entity.