ACC 281T WK 3 PRACTICE TOPIC 9 ASSESSING HOW WELL
COMPANIESMANAGETHEIR INVENTORIES QUICK CHECK
1. Which of the following factors are used in calculating a company’s inventory
turnover?
o Net sales and average inventory
o Cost of goods sold and average working capital
o Average inventory and cost of goods sold
o Average accounts receivable and net sales
FEEDBACK
(100.0%)
2. Which of the following factors are used in calculating a company’s number of days’ sales in
inventory?
o Average accounts payable and
o 365 Inventory turnover and 365
o Average inventory and 365
o Cost of goods sold and 365
FEEDBACK
(100.0%)
3. The two ratios that help a company measure how effectively it is managing its
inventory are:
o Accounts receivable turnover and number of days’ sales in inventory
o Inventory turnover and number of days’ purchases in accounts payable
o Inventory turnover and number of days’ sales in inventory
o Number of days’ sales in inventory and number of days’ purchases in
accounts payable
FEEDBACK
, (100.0%)
4. Which ratio tells how many times a year a company is replenishing its inventory?
Inventory turnover
o
o Accounts receivable turnover Number of days’
o sales in inventory
o Number of days’ purchases in accounts
FEEDBACK
payable
(100.0%)
5. Which ratio tells how long it takes a company to sell its inventory once the inventory has been
purchased?
o Accounts receivable turnover Inventory
o turnover
o Number of days’ purchases in accounts
o payable
FEEDBACK
Number of days’ sales in inventory
(100.0%)
6. Iffy Company and Benchmark Company operate in the same industry. Benchmark Company is
widely viewed as managing its business very well and is the standard to which other companies
compare themselves. Here are inventory-related financial ratio values for Iffy and Benchmark for
Year 1 and Year 2:
IFFY Year 1 Y
e
a
r
2
Inventory Turnover 10 1
2
Number of Days' Sales in Inventory 36.5 3
0
.
4
BENCHMARK Year 1 Y
e
a
r
COMPANIESMANAGETHEIR INVENTORIES QUICK CHECK
1. Which of the following factors are used in calculating a company’s inventory
turnover?
o Net sales and average inventory
o Cost of goods sold and average working capital
o Average inventory and cost of goods sold
o Average accounts receivable and net sales
FEEDBACK
(100.0%)
2. Which of the following factors are used in calculating a company’s number of days’ sales in
inventory?
o Average accounts payable and
o 365 Inventory turnover and 365
o Average inventory and 365
o Cost of goods sold and 365
FEEDBACK
(100.0%)
3. The two ratios that help a company measure how effectively it is managing its
inventory are:
o Accounts receivable turnover and number of days’ sales in inventory
o Inventory turnover and number of days’ purchases in accounts payable
o Inventory turnover and number of days’ sales in inventory
o Number of days’ sales in inventory and number of days’ purchases in
accounts payable
FEEDBACK
, (100.0%)
4. Which ratio tells how many times a year a company is replenishing its inventory?
Inventory turnover
o
o Accounts receivable turnover Number of days’
o sales in inventory
o Number of days’ purchases in accounts
FEEDBACK
payable
(100.0%)
5. Which ratio tells how long it takes a company to sell its inventory once the inventory has been
purchased?
o Accounts receivable turnover Inventory
o turnover
o Number of days’ purchases in accounts
o payable
FEEDBACK
Number of days’ sales in inventory
(100.0%)
6. Iffy Company and Benchmark Company operate in the same industry. Benchmark Company is
widely viewed as managing its business very well and is the standard to which other companies
compare themselves. Here are inventory-related financial ratio values for Iffy and Benchmark for
Year 1 and Year 2:
IFFY Year 1 Y
e
a
r
2
Inventory Turnover 10 1
2
Number of Days' Sales in Inventory 36.5 3
0
.
4
BENCHMARK Year 1 Y
e
a
r
