The Cost-Of-Goods-Sold (COGS) Model Can

question 85

Multiple Choice

The cost-of-goods-sold (COGS) model can:

• A) only be used with a periodic inventory system.
• B) determine what type of merchandise a company should offer its customers.
• C) be used to determine net sales.
• D) be used to determine how much inventory a company should buy.

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Definitions:

Gross Margin

The difference between sales revenue and cost of goods sold, expressed as a percentage of sales revenue, indicating the efficiency of a company in managing its production costs.

Accounts Receivable Turnover

A financial ratio that measures how efficiently a company collects revenue by comparing net credit sales to the average accounts receivable over a period.

Inventory Turnover

A ratio that shows how often a company's inventory is sold and replaced over a specific period, indicating efficiency in managing stock levels.

Capital Structure

The combination of a business's long-term loans, particular short-term borrowings, common stock, and preferred stock, employed to fund its general activities and expansion.