The Inventory Days Ratio Measures

question 67

Multiple Choice

The inventory days ratio measures:

• A)the average length of time it takes a company to sell its inventory.
• B)the average length of time it takes the company's suppliers to deliver its inventory.
• C)the level of sales required to keep a company's average inventory on the books.
• D)the percentage change in inventory over the past year.

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Definitions:

Inelastic Demand

A situation where the demand for a product does not significantly change with a change in its price.

Excise Tax

A tax levied on the sale of particular goods and services, such as alcohol, tobacco, and gasoline.

Pretax Equilibrium

The market condition where supply and demand balance before any taxes are applied.

Tax Incidence

The analysis of the effect of a particular tax on the distribution of economic welfare, including which group - consumers or producers - ultimately bears the cost of the tax.