The Days' Sales in Inventory Is Calculated by Dividing Ending

question 256

True/False

The days' sales in inventory is calculated by dividing ending inventory by cost of goods sold and multiplying the result by 365.

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Definitions:

Capital Stock

The total amount of shares that a company is authorized to issue, representing ownership in the company.

Accounts Receivable

Outstanding payments from clients to a company for delivered services or products.

Direct Method

A way of reporting cash flows from operating activities in which major classes of gross cash receipts and payments are disclosed.

Cash Received

The actual amount of money received by a company during a specific period, including from sales, services, loans, investments, and other sources.