The Days' Sales in Inventory Ratio Is Computed by Dividing

question 113

True/False

The days' sales in inventory ratio is computed by dividing ending inventory by cost of goods sold and multiplying the result by 365.

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Definitions:

Percentage Of Change

A mathematical calculation used to determine the percentage increase or decrease of a value over a period of time.

Quick Assets

Those assets— mainly cash, accounts receivable, and notes receivable—that can be easily turned into cash.

Current Liabilities

Obligations that will come due within one year or within the operating cycle, whichever is longer.

Common-Size Income Statement

A common-size income statement presents all line items as a percentage of revenue, allowing for easier comparison across companies and time periods by standardizing financial statements.