BuyFindarrow_forward

Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883

Solutions

Chapter
Section
BuyFindarrow_forward

Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883
Textbook Problem

A measure useful in evaluating efficieny in the management of inventories is the:

A. Working capital ratio

B. Quick ratio

C. Days' sales in inventory

D. Ratio of fixed assets to long-term liabilities

To determine

Concept Introduction:

Inventory Turnover Ratio:

Inventory Turnover Ratio measures the efficiency of the company in converting its inventory into sales. It is calculated by dividing the Cost of goods sold by the Average inventory. The formula of the Inventory Turnover Ratio is as follows:

  Inventory Turnover Ratio=Cost of goods soldAverage inventory

Note: Average inventory is calculated with the help of following formula:

  Average inventory=(Beginning inventory + Ending inventory)2

Day's sales in inventory:

Days sales in inventory represent the number of days the inventory waits for the sale. It is calculated using the following formula:

  Day Sales in Inventory =  Inventory *365Cost of Goods Sold 

To Choose:

The measure useful in evaluating efficiency in the management of inventories.

Explanation

Explanation for correct answer:

Sales in inventory represent the number of days the inventory waits for the sale. This is useful in evaluating efficiency in the management of inventories. Hence, the correct option is C.

Explanation for incorrect answers:

A. Working capital ratio evacuates the current position of the company...

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

What is a LIFO reserve?

Intermediate Accounting: Reporting And Analysis

PRESENT AND FUTURE VALUES Of A CASH FLOW STREAM An investment will pay 100 at the end of each of the next 3 sta...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

If a stock is not in equilibrium, explain how financial markets adjust to bring it into equilibrium.

Fundamentals of Financial Management, Concise Edition (MindTap Course List)

What is a nondiscretionary bonus?

PAYROLL ACCT.,2019 ED.(LL)-TEXT

What is a base year?

Macroeconomics