Which of the following statements is correct concerning the Days' sales in raw materials inventory? Multiple...
Which of the following statements is correct concerning the Days' sales in raw materials inventory?
Multiple Choice
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A measure of how long it takes raw materials to be used in production.
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The ratio is not useful for a manufacturer.
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Reveals how many times a company turns over its raw materials inventory in a period.
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Most companies generally prefer a higher number of days' sales in raw materials inventory.
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Is calculated by taking the Raw materials used/Average raw materials inventory.
Homework Answers
Answer: A measure of how long it takes raw materials to be used in production.
The ratio is calculated as:
Average inventory*365/COGS. The result is the number of days inventory is outstanding before it is used in production.
Other options:
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The ratio is not useful for a manufacturer. IT IS USEFUL TO THE MANUFACTURER ONLY
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Reveals how many times a company turns over its raw materials inventory in a period. IT IS INVENTORY TURNOVER. FROM TURNOVER THE NUMBER OF DAYS INVENTORY OUTSTANDING CAN BE FOUND OUT.
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Most companies generally prefer a higher number of days' sales in raw materials inventory. COMPANIES PREFER LOWER NUMBER OF DAYS AS IT MEANS LOWER INVESTMENT IN INVENTORY.
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Is calculated by taking the Raw materials used/Average raw materials inventory. THE RATIO IS WHAT IS GIVEN ALONG WITH THE OPTION.
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Which of the following statements is correct concerning the
Days' sales in raw materials inventory?
Multiple...
Which of the following statements is correct concerning the days' sales in raw materials inventory ratio?...
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