#1
Which of the following is a commonly used inventory management method for valuing inventory?
FIFO
LIFO
Average Cost
Specific Identification
#2
What financial ratio measures a company's ability to pay off its short-term liabilities with its most liquid assets?
Current ratio
Quick ratio
Inventory turnover ratio
Debt-to-equity ratio
#3
Which of the following inventory valuation methods assumes that the newest inventory items are sold first?
FIFO
LIFO
Weighted Average Cost
Specific Identification
#4
A company has an inventory turnover ratio of 6. What does this indicate?
The company sells its inventory 6 times a year.
The company takes 6 years to sell its inventory.
The company's inventory is obsolete.
The company's inventory is overvalued.
#5
In inventory management, what does the Economic Order Quantity (EOQ) represent?
The optimal order quantity that minimizes total inventory costs
The maximum order quantity a company can afford
The minimum order quantity required for a discount
The total quantity of inventory a company can hold
#6
Which financial ratio measures the relationship between a company's net income and its shareholders' equity?
Return on Assets (ROA)
Return on Equity (ROE)
Gross Profit Margin
Net Profit Margin
#7
What is the purpose of safety stock in inventory management?
To prevent stockouts and meet unexpected demand
To increase inventory turnover ratio
To reduce carrying costs
To minimize order costs
#8
Which financial ratio measures how efficiently a company uses its assets to generate revenue?
Inventory turnover ratio
Return on Assets (ROA)
Gross Profit Margin
Operating Profit Margin
#9
What is the purpose of ABC analysis in inventory management?
To identify the most valuable items in inventory
To determine the average cost of inventory
To calculate the economic order quantity
To assess the turnover ratio of inventory
#10
Which financial ratio measures the efficiency of a company in managing its inventory?
Inventory turnover ratio
Profit margin ratio
Return on investment ratio
Debt ratio
#11
What is the formula for calculating the inventory turnover ratio?
Cost of Goods Sold / Average Inventory
Average Inventory / Cost of Goods Sold
Sales / Average Inventory
Average Inventory / Sales
#12
Which inventory costing method is more commonly used in periods of rising prices?
FIFO
LIFO
Weighted Average Cost
Specific Identification
#13
What does the inventory turnover ratio indicate when it decreases over time?
Improved efficiency in inventory management
Decreased liquidity of inventory
Reduced sales compared to the inventory
Increased profitability
#14
What effect does a decrease in the current ratio have on a company's liquidity?
Decreases liquidity
Increases liquidity
Has no effect on liquidity
Increases profitability
#15
Which inventory valuation method assigns the actual cost to each item in the inventory?
FIFO
LIFO
Specific Identification
Weighted Average Cost
#16
What does a high inventory turnover ratio indicate?
Slow-moving inventory
Efficient inventory management
Decreased sales
Increased carrying costs