Which of the following is a commonly used ratio to discover inventory-related fraud?
A) Number of days' in receivable ratio
B) Sales return percentage ratio
C) Gross profit ratio
D) Earnings per share

Question

Quizplus · Accepted Answer

The gross profit ratio compares the gross profit earned on sales to the total revenue generated. If this ratio is consistently declining along with an increase in inventory balance, it may indicate potential inventory-related fraud such as overstatement of inventory or understatement of cost of goods sold. The other options are not directly related to inventory-related fraud.

Which of the Following Is a Commonly Used Ratio to Discover