Which of the Following Is NOT True About the Inventory

question 109

Multiple Choice

Which of the following is NOT true about the inventory turnover ratio?

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

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Definitions:

Reverse Flows

The process of moving goods from their final destination back to the vendor or manufacturer for returns, recycling, or disposal.

Non-Value-Added Cost

This refers to expenses that do not contribute to adding value to a product or service from the customer's perspective, often considered for reduction or elimination in efficiency efforts.

Prescriptive Analytics

The aspect of business analytics focused on providing organizations with actionable recommendations and decisions based on data.