The ABC Approach to Inventory Management Is Based on the Concept

question 57

Multiple Choice

The ABC approach to inventory management is based on the concept that:

• A)inventory should arrive just in time to be used.
• B)the inventory period should be constant for all inventory items.
• C)basic inventory items that are essential to production and also inexpensive should be ordered in small quantities only.
• D)a small percentage of the inventory items probably represents a large percentage of the inventory cost.
• E)one-third of a year's inventory need should be on hand, another third should be on order, and the last third should not be ordered yet.

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Definitions:

Residual Dividend Policy

A strategy where dividends are paid after all project capital needs and working capital requirements are met.

Dividend Payout Ratio

The percentage of net income paid to shareholders in the form of dividends.

Earnings Per Share

A financial ratio that indicates the portion of a company's profit allocated to each outstanding share of common stock, serving as an indicator of a company's profitability.

Dividend

A portion of a company's earnings distributed to its shareholders, typically in the form of cash payments or additional shares.