Which of the Following Is a Positive Sign That a Company

question 18

Multiple Choice

Which of the following is a positive sign that a company is selling its inventory quickly?

• A)A low inventory turnover ratio.
• B)A high inventory turnover ratio.
• C)A low average days in inventory.
• D)Both a high inventory turnover ratio and a low average days in inventory.

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Definitions:

Completed Contract Method

An accounting method where revenue and expenses are only recognized once a contract is fully completed, commonly used in the construction industry.

Long-Term Contracts

Agreements that extend beyond one year, often relating to construction, service, or lease contracts.

Losses

Financial transactions or events that result in a decrease in assets, increase in liabilities, or both, leading to a reduction in equity or net assets.

Sale

A transaction between two parties where the buyer receives goods, services, or assets in exchange for money.