Table 3.2
Dana Dairy Products Key Ratios Income Statement
Dana Dairy Products
For the Year Ended December 31, 2010 Balance Sheet
Dana Dairy Products
December 31, 2010
-The inventory management at Dana Dairy Products ________ since 2009. (See Table 3.2)
A) has deteriorated
B) remained the same
C) has improved slightly
D) cannot be determined

Question

Table 3.2
Dana Dairy Products Key Ratios  Income Statement
Dana Dairy Products
For the Year Ended December 31, 2010  Balance Sheet
Dana Dairy Products
December 31, 2010 
-The inventory management at Dana Dairy Products ________ since 2009. (See Table 3.2)
A) has deteriorated 
B) remained the same 
C) has improved slightly 
D) cannot be determined

Quizplus · Accepted Answer

We can determine this by looking at the inventory turnover ratio, which is calculated by dividing the cost of goods sold by the average inventory. In 2009, the inventory turnover ratio was 8.13, and in 2010, it increased to 8.84. This means that Dana Dairy Products was able to sell its inventory more quickly in 2010, indicating an improvement in inventory management. Therefore, the best choice is C – has improved slightly.

Table 3.2 Dana Dairy Products Key Ratios Income Statement