Which of the following statements is correct concerning the Days' sales in raw materials inventory?

a. A measure of how long it takes raw materials to be used in production.

b. The ratio is not useful for a manufacturer.

c. Reveals how many times a company turns over its raw materials inventory in a period.

d. Most companies generally prefer a higher number of days' sales in raw materials inventory.

e. Is calculated by taking the Raw materials used/Average raw materials inventory.

Question

Betty Boop

Business

22 July, 10:05

Which of the following statements is correct concerning the Days' sales in raw materials inventory?

a. A measure of how long it takes raw materials to be used in production.

b. The ratio is not useful for a manufacturer.

c. Reveals how many times a company turns over its raw materials inventory in a period.

d. Most companies generally prefer a higher number of days' sales in raw materials inventory.

e. Is calculated by taking the Raw materials used/Average raw materials inventory.

+4

Answers (1)

Know the Answer?

Zayne Hughes · Answer 1

C

Explanation:

This is because the days' sales of raw material in inventory tells us the number of days it took a company to sell its inventory during a recent period and it is calculated by taking the raw materials used divided by the average raw materials inventory.