The Inventory Turnover Ratio

question 141

Multiple Choice

The inventory turnover ratio:

• A)is determined by dividing cost of goods sold by net sales.
• B)shows how many times the company sold its average level of inventory.
• C)should be high for a company that sells high-priced inventory items.
• D)will be lower for companies that have many low-priced items in their inventory.

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Definitions:

Escalation Of Commitment

Refers to the phenomenon where individuals or organizations continue to invest time, money, or resources into a failing decision or project, due to the substantial investments already made, rather than abandon it.

Psychological Determinants

Factors of psychological origin that influence an individual's behaviors, attitudes, and perceptions.

Group Polarization

describes the phenomenon where discussions within a group lead to an amplification of the group’s initial attitude, making their final stance more extreme.

Overconfidence Bias

A cognitive bias where an individual's subjective confidence in their judgments is greater than their objective accuracy, leading to overly optimistic assessments and decision-making errors.