How Long a Company Holds Inventory Before Selling It Can

question 129

Multiple Choice

How long a company holds inventory before selling it can be measured by dividing Cost of Goods Sold by the average Inventory balance to determine the:

• A)Accounts receivable turnover.
• B)Inventory turnover.
• C)Days' sales uncollected.
• D)Current ratio.
• E)Price earnings ratio.

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Definitions:

Manufacturing

The process of turning raw materials into finished products through various methods, including human labor, machinery, and chemical processing.

CPI

The Consumer Price Index, a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care, calculated by taking price changes for each item in the predetermined basket of goods and averaging them.

Real Wages

The purchasing power of wages, adjusted for inflation, indicating the quantity of goods and services that can be bought with a unit of labor.

CPI

Consumer Price Index, a measure that examines the weighted average of prices of a basket of consumer goods and services, used as an indicator of inflation.