In calculating inventory turnover, why is cost of goods sold used as the numerator? As the inventory

Question:

In calculating inventory turnover, why is cost of goods sold used as the numerator? As the inventory turnover increases, what increasing risk does the business assume?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Intermediate Accounting

ISBN: 978-0470423684

13th Edition

Authors: Donald E. Kieso, Jerry J. Weygandt, And Terry D. Warfield

See More Books

Question Posted: Feb 18, 2011 12:44 AM

See More Questions

Calculating Ending Inventory and Cost of Goods Sold Under FIFO, LIFO, and Average Cost Star Company uses a periodic inventory system. At the end of the annual accounting period, December 31, 2012,...
Calculating Cost of Ending Inventory and Cost of Goods Sold under Periodic FIFO, LIFO, and Weighted Average Cost Oahu Kiki tracks the number of units purchased and sold throughout each accounting...
Inventory and cost of goods sold information for Lafleche Inc. is provided below: Required: a. Calculate the inventory turnover ratio and average number of days in inventory under the two cost...
Distance between Cars (Refer to Example 6.) At 9:00 A.M. car A is traveling north at 50 miles per hour and is located 50 miles south of car B. Car B is travel- ing west at 20 miles per hour. (a) Let...
Sundial Technologies produces and sells customized network systems in New Brunswick. The company offers a 60-day, all software and labour-and an extra 90-day, parts-only-warranty on all of its...
Zip Shuttle Service operates airport shuttle vans in 12 large cities: Los Angeles, San Diego, San Francisco, Phoenix, Las Vegas, Houston, Dallas, Chicago, New York City, Washington DC, Miami, and...
Enter the letter for each term in the blank space beside the definition that it most closely matches. A. Sales discount B. Credit period C. Discount period D. FOB destination E. FOB shipping point F....
On the basis of the following data, determine the value of the inventory at the lower of cost or market. Assemble the data in the form illustrated in Exhibit8. Inventory Unit Unit Cost Price $ 80...
Express the following comparative income statements in common-size percents. Using the common-size percents, which item is most responsible for the decline in net income? Complete this question by...
A ride hailing company has their DB structured in 3 major tables as described in the SCHEMA section below. Write a query to fetch the top 100 users who traveled the most distance using the service....
Distinguish between ratio analysis and percentage analysis relative to the interpretation of financial statements. What is the value of these two types of analyses?
What is the relationship of the asset turnover ratio to the rate of return on assets?
What information was generally available about the company CDNow prior to the 1999 audit? How would that information affect the nature of the audit?
What did the NFL do to create much needed visibility for corporate sponsors during the football season when fans were not allowed at games due to the virus?
The Haines Corporation shows the following financial data for 20X1 and 20X2: Sales Cost of goods sold Selling & administrative expense Gross profit Operating profit Interest expense Income before...
From the trial balance of Hugo's Cleaners , ?prepare the following for August: 1 . ?Income Statement 2 . ?Statement of?owner's equity 3 . ?Balance sheet Trail Balance: Hugo's Cleaners Trial Balance...
Below is the change in stock for Dow Jones Index for the month of January through July. In the Monthly Change in Stock, create a formula that you can copy down that will calculate the monthly change...
-> 14.8 The following information has been extracted from the books of Nimmo Limited for the year to 31 December 20X9: Profit and Loss Accounts for year to 31 December 20X8 000 20X9 000 Profit before...
The Klaven Corporation has operating income (EBIT) of $750,000. The company's depreciation expense is $200,000. Klaven is 100 percent equity financed, and it faces a 40 percent tax rate. Assume that...
r = 0.18 Find the coefficients of determination and non-determination and explain the meaning of each.
Find the dimensions of the box with square base with (a) Volume 12 and the minimal surface area. (b) Surface area 20 and maximal volume.
Refer to the information in E18.31. Instructions a. Does the accounting for capitalized costs change if the contract is for 1 year rather than 3 years? Explain. b. Dans Demolition is a startup...
During 2022, Nilsen Company started a construction job with a contract price of $1,600,000. The job was completed in 2024. The following information is available. Instructions a. Compute the amount...
In 2022, Steinrotter Construction began construction work under a 3-year contract. The contract price was 1,000,000. Steinrotter uses the percentage-of-completion method for financial accounting...
Jennifer purchased a home for $1,000,000 in 2016. She paid $200,000 cash and borrowed the remaining $800,000. This is Jennifer's only residence. Assume that in year 2024, when the home had...
business plan describing company with strengths and weaknesses. Any gaps in plan. Recommendations for improvement of the plan.
You wish to buy a car today for $35,000. You plan to put 10% down and finance the rest at 5.20% p.a. for six years. You will make equal monthly payments of $_______.

In calculating inventory turnover, why is cost of goods sold used as the numerator? As the inventory

Question:

Step by Step Answer:

Cost of goods sold is used for two reasons first cost must be used rather than retail value be...View the full answer

Intermediate Accounting

Related Video

Students also viewed these Accounting questions