The Reorder Point Is the Level of Inventory That Prompts

question 75

True/False

The reorder point is the level of inventory that prompts a new order to be placed in a continuous inventory system.

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Definitions:

Current Ratio

An indicator of how well a company can fulfill its short-term financial obligations within a year, calculated by the division of current assets by current liabilities.

Year 2

A reference to the second year of a company's operations, project timeframe, or any specific period's second year.

Operating Cycle

The duration of time it takes for a company to purchase inventory, sell the products, and collect cash from the sales.

Year 2

Typically refers to the second year in a given context, such as the fiscal year, a multi-year plan, or period analysis.