If the Price Index for a Particular Year Is 75

question 117

Multiple Choice

If the price index for a particular year is 75, it implies that ________.

• A) prices have increased by 7.5% over the base year
• B) prices have increased by 0.75% over the base year
• C) prices have decreased by 0.25% compared to the base year
• D) prices have decreased by 25% compared to the base year

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Definitions:

Payables Turnover

A financial efficiency ratio that measures how quickly a company pays off its suppliers by comparing net purchases to average accounts payable.

Inventory Turnover

Inventory Turnover is a measure of how often a company sells and replaces its stock of goods within a certain period, indicating efficiency in managing inventory.

Cash Cycle

Cash Cycle, also known as the cash conversion cycle, measures the time it takes a company to convert resource inputs into cash flows.

Inventory Turnover

A metric that measures the efficiency of a company in managing its stock of goods through the calculation of the cost of goods sold divided by average inventory.