Indicate whether each of the following statements about financial statement analysis is true or false.Having too little inventory can hurt a company's profitability because of lost sales. ______Having too much inventory can hurt a company's profitability because of excess costs. ______Generally, a lower inventory turnover indicates that merchandise is being handled more efficiently. ______Average days to sell inventory is the number of times, on average, that inventory is replaced during the year. ______Values for the inventory turnover ratio vary widely among different industries. ______
What will be an ideal response?
Having too little inventory can hurt a company's profitability because of lost sales. T
Having too much inventory can hurt a company's profitability because of excess costs. T
Generally, a lower inventory turnover indicates that merchandise is being handled more efficiently. F
Average days to sell inventory is the number of times, on average, that inventory is replaced during the year. F
Values for the inventory turnover ratio vary widely among different industries. T
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(Appendix) When preparing a schedule for the calculation of cash generated from operating activities under the direct method, the decrease in Merchandise Inventory is
a. added to cost of goods sold. b. added to operating expenses. c. subtracted from cost of goods sold. d. subtracted from operating expenses.
The objective function of the transportation model may seek to minimize the overall cost of transportation, which can be calculated as:
a. The scalar product of the quantities shipped from a given source to a given destination and their respective transportation costs per unit. b. The sum of the transportation costs per unit from a given source to a given destination. c. The sum of the total cost from a given source to a given destination. d. All of the above
You are considering an investment in Facebook stock and wish to assess the company's position in the stock market. All of the following ratios can be used except:
A. Working capital. B. Earnings per share. C. Price-earnings ratio. D. Dividend yield.
In the context of corporate governance, the U.K. and U.S. systems have been termed ________ systems because of dispersed ownership of corporate equity among a large number of external investors.
A. ethical B. cascade C. outsider D. insider