A Company That Specializes in Planning Parties for Children Had

question 15

Multiple Choice

A company that specializes in planning parties for children had $7,000 worth of inventory on January 1,2007,and it had $5,000 worth of inventory on December 31,2007.If its cost of goods sold for that period was $10,000,and its net profit was $9,000,which of the following represents its inventory turnover ratio?

• A) 3 times
• B) 1.5 times
• C) 1.67 times
• D) 1 times

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Definitions:

Perfectly Competitive

A market structure characterized by a large number of buyers and sellers, homogenous products, no barriers to entry or exit, and perfect information among market participants.

Normal Good

A good for which demand increases when consumer income rises, showing a positive relationship between income and demand.

Income Rises

An increase in the amount of money or value earned or received by an individual, business, or country over a certain period.

Leisure

A period of free time not taken up by work, domestic responsibilities, or other obligatory tasks, often used for rest, recreation, or cultural activities.