11) Which of the following companies will probably have the lowest inventory turnover ratio?
A) Auto dealership
B) Clothing store
C) Bakery
D) All of these companies will have the same inventory turnover ratio.
12) Gross profit is calculated by deducting ________.
A) current assets from current liabilities
B) revenues from expenses
C) cost of goods sold from net sales
D) ending inventory from cost of goods available for sale
13) Inventory information for Cut Above, Inc. is provided below. Sales for the period were 2,000 units at $10 each. The company uses FIFO.
Date
|
|
Number of Units
|
Unit Cost
|
January 1
|
Beginning inventory
|
1,000
|
$3.00
|
January 10
|
Purchase
|
2,000
|
$4.00
|
January 15
|
Purchase
|
1,200
|
$4.25
|
Determine the gross profit ratio at January 31.
A) 60%
B) 65%
C) 40%
D) 57.5%
14) Which company is most likely to have a higher inventory turnover? A company with ________.
A) higher-priced goods and lower gross profit
B) lower-priced goods and lower gross profit
C) higher-priced goods and higher gross profit
D) a higher gross profit ratio
15) Which financial statement(s) is/are needed in order to calculate the average days in inventory?
A) income statement only
B) balance sheets only
C) both the income statement and balance sheets
D) both the statement of cash flows and income statement
16) If Puffins Turnovers, Inc., has an inventory turnover ratio of 73 times, then its average days in inventory must be ________.
A) 20 days
B) 5 days
C) 0.2 days
D) 2 days
17) The gross profit ratio is calculated by dividing gross profit by sales.
18) The asset turnover ratio is the most useful way to determine if a merchandising company is selling its inventory effectively.
19) The gross profit ratio is the most useful way to determine if a merchandising company is selling its inventory effectively.
20) McDonald’s gross profit ratio is higher than The Boeing Company.
21) The gross profit ratio measures the percentage of revenue left over after deducting cost of goods sold from net sales.