Which One of the Following Statements About the Inventory Turnover

question 22

Multiple Choice

Which one of the following statements about the inventory turnover ratio is NOT correct?

• A) It is calculated by dividing inventory by cost of sales.
• B) It measures how many times the inventory is turned over into saleable products.
• C) The more times a company can turn over the inventory, the better.
• D) Too high a turnover or too low a turnover could be a warning sign.

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Definitions:

Corn Farming

The agricultural practice of cultivating corn or maize, used for various purposes including food, feed, and biofuel.

Monopolistic Competition

A market structure characterized by many firms selling products that are similar but not identical, allowing for some degree of market power.

Soft-Drink

A non-alcoholic beverage that is usually carbonated and flavored, such as sodas and colas.

Differentiated Products

Goods or services that are distinguished from similar products by unique characteristics, branding, or quality, leading to reduced price competition.