Umbero Nix, a garment manufacturing company, produces twenty thousand units of sweaters. These units are sold within three months and replenished with another twenty thousand units. In one year, Umbero Nix replaces its inventory of sweaters four times over. Umbero Nix most likely analyzes _____ to measure how many times its inventory is sold and replaced each year.
A)liquidity ratios
B)profitability ratios
C)leverage ratios
D)asset management ratios

Question

Quizplus · Accepted Answer

Asset management ratios are used to measure how efficiently a company is managing its assets in order to generate revenue. One such ratio is inventory turnover, which measures how many times a company's inventory is sold and replaced within a given time period. In this case, Umbero Nix is replacing its inventory of sweaters four times over a period of one year, indicating a high inventory turnover rate. Therefore, Umbero Nix most likely analyzes asset management ratios to measure how many times its inventory is sold and replaced each year.

Umbero Nix, a Garment Manufacturing Company, Produces Twenty Thousand Units