5 a high inventory turnover may indicate that a company is experiencing difficulty s 4310530

5) A high inventory turnover may indicate that a company is experiencing difficulty selling its inventory.

6) A ratio can be expressed as a proportion, a rate, or a percent.

7) A profitability ratio measures the income or operating success of a company for a given period of time.

8) The larger the working capital, the better the ability to pay debts.

9) Cash, short-term investments and net current receivables are all components of the acid-test ratio.

10) Inventory turnover is calculated by dividing the cost of goods sold by the average receivables.

11) Ratios that test liquidity include all of the following EXCEPT:

A) acid-test ratio.

B) current ratio.

C) debt to total assets.

D) inventory turnover.

12) To compute operating income (profit) percentage, divide:

A) sales by cost of goods sold.

B) gross profit by net sales.

C) net income by stockholders' equity.

D) operating income by net sales.

13) A measure of a company's ability to collect cash from credit customers is the:

A) accounts receivable turnover.

B) earnings per share.

C) inventory turnover.

D) acid-test ratio.

14) Kaufman's Department Store had net sales of $20 million and cost of goods sold of $14 million for the year. The average inventory for the year was $4 million. What was the average number of days in inventory?

A) 46

B) 104

C) 92

D) 52