1.0Days' sales in inventory:

Is also called days' stock on hand

Focuses on average inventory rather than ending inventory

Is used to measure solvency

Is calculated by dividing cost of goods sold by ending inventory

Is a substitute for the acid-test ratio

2. Damaged and obsolete goods:

Are never included in inventory

Are included in inventory at their full cost

Are included in inventory at their net realizable value

Should be disposed of immediately

Are assigned a value of zero