Which of the following measures is not a good example of a substantive analytical procedure for inventory activities and related accounts?
A) The inventory turnover ratio.
B) Gross profit margin ratio.
C) Current ratio.
D) Number of days sales in inventory.

Question

Quizplus · Accepted Answer

The current ratio is a liquidity ratio that measures a company's ability to pay off its current liabilities with its current assets. It is not a substantive analytical procedure for inventory activities and related accounts. The other options, such as the inventory turnover ratio, gross profit margin ratio, and number of days sales in inventory, are all commonly used analytical procedures for inventory activities and related accounts.

Which of the Following Measures Is Not a Good Example