The Formula, Cost of Sales/average Inventory, Measures The

question 33

Multiple Choice

The formula, cost of sales/average inventory, measures the:

• A) gross profit ratio.
• B) number of times, on average, that inventory is turned over per year.
• C) mark-up on inventory expressed as a percentage of the cost price.
• D) mark-up on inventory expressed as a percentage of the selling price.

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Definitions:

Debt Financing

Raising capital through the borrowing of funds to be repaid with interest over time.

FIFO Method

First In, First Out, an inventory valuation method where the oldest inventory is sold first.

Inventory Value

Inventory value is the total cost or market value of all the goods held by a company that are ready or will be ready for sale.

Cost Of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including materials and labor.