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Reading 35: Inventories - LOS d ~ Q1-2

Q1. The inventory turnover ratio and the number of days in inventory are least likely used to evaluate the:

A)   stability of a firm’s inventory levels.

B)   effectiveness of a firm’s inventory management.

C)   age of a firm’s inventory.

Q2. Which of the following ratio levels would suggest that a company is holding obsolete inventory?

A)   Low inventory value compared to cost of goods sold.

B)   Low inventory turnover ratio.

C)   Low number of days in inventory.

d

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