What Net Sales Are Required to Obtain a Stockturn Rate

question 98

Multiple Choice

What net sales are required to obtain a stockturn rate of 5--given an average inventory at cost of $100,000 and a gross margin of 50 percent?

• A) $100,000
• B) $1,500,000
• C) $600,000
• D) $1,000,000
• E) $400,000

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Definitions:

Sum-Of-The-Years'-Digits Method

A depreciation method that accelerates the expense recognition, basing the depreciation for each year on a decreasing fraction of the depreciable amount.

Benefits Decline

A situation where the advantages or value derived from an asset or service decrease over time.

Depreciable Base

The cost of an asset less its salvage value, representing the total amount that can be depreciated over its useful life.

Residual Value

Residual value is the estimated value of an asset at the end of its useful life, reflecting what it could be sold for or its salvage value.