Which of the Following Statements Is Not Correct Regarding the Importance

question 80

Multiple Choice

Which of the following statements is not correct regarding the importance of inventory turnover to a company's profitability?

• A)Companies will prefer to have a low inventory turnover rather than a high inventory turnover.
• B)It is sometimes more desirable to sell a large amount of merchandise with a small amount of gross margin than a small amount of merchandise with a large amount of gross margin.
• C)A company's profitability is affected by how rapidly inventory sells.
• D)A company's profitability is affected by the spread between cost and selling price.

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Definitions:

Average Tax Rate

The portion of total income that is paid as tax, calculated by dividing the total amount of taxes paid by the taxpayer’s total income.

Tax Liability

The total amount of tax that an individual or entity is legally obligated to pay to a taxing authority.

Regressive

Pertains to a situation or policy that has a disproportionately greater impact on those with lower income or status.

Excise Tax

A tax imposed on the sale or manufacture of specific goods, such as alcohol and tobacco, within a country.