QUESTION 7: Using the average inventory in the denominator of the inventory turnover ratio rather than...
QUESTION 7: Using the average inventory in the denominator of the inventory turnover ratio rather than using the year-end balance would be especially important for
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a firm with seasonal sales |
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a firm with a high level of debt |
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a company that has multiple business divisions |
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a service firm |
Homework Answers
Option 1 is correct. a firm with seasonal sale.
The firms with the Seasonal sales dont have evenly distributed inventory. Therefore, it is better for them to use the Closing Inventory instead of Average Inventory.
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