Which of the Following Statements Is Most Consistent with Efficient

question 45

Multiple Choice

Which of the following statements is most consistent with efficient inventory management? The firm has a

• A) below-average inventory turnover ratio.
• B) low incidence of production schedule disruptions.
• C) below-average total assets turnover ratio.
• D) relatively high current ratio.
• E) relatively low DSO.

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Definitions:

Operating Cycle

The period between the acquisition of inventory by a business and the collection of accounts receivable generated from the sale of that inventory.

Acquisition Of Inventory

The process through which a business purchases goods to be sold, which may be raw materials for manufacturing or finished goods for resale.

Collection Of Cash

The process by which businesses gather or accumulate monetary payments received from customers.

Committed Operating Loan

A loan agreement where the lender agrees to provide a fixed amount of operating capital to a borrower for a specified term.