Which Is the Most Useful Way to Analyze the Inventory

question 103

Multiple Choice

Which is the most useful way to analyze the inventory turnover ratio?

• A)Compare the inventory turnover ratio of a company to other companies in the same industry.
• B)Compare the inventory turnover ratio of a company to its own results from prior periods.
• C)Compare the inventory turnover ratio of a company to a suitable benchmarks
• D)None of the above.

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Definitions:

Balance Sheet

A financial statement that summarizes an entity's assets, liabilities, and shareholders' equity at a specific point in time.

Financial Statements

Formal records of the financial activities and position of a business, individual, or other entity, typically including the balance sheet, income statement, and cash flow statement.

Trial Balance

A financial statement that lists all the accounts of a company and their balances at a particular time, used to ensure that debits equal credits.

Adjusted

Pertaining to alterations made to financial statements or balances to correct them or to reflect changes not captured in the original entries.