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Basic Question 8 of 26
An inventory write-down has a positive effect on ______.
B. profitability ratios
C. activity ratios
A. liquidity ratios
B. profitability ratios
C. activity ratios
User Contributed Comments 3
| User | Comment |
|---|---|
| johntan1979 | That's why this topic is tested in the CFA exam. Very important to see how easily companies can manipulate activity ratios just by writing down inventory. If a company keep writing down inventory, something is not right. Therefore, don't just look at high inventory turnover as a good sign. |
| Rachelle3 | Thanks again johntan1979 |
| fredpat01 | thank you for giving the insight Johntan1979 |
I used your notes and passed ... highly recommended!
Lauren
Learning Outcome Statements
describe the measurement of inventory at the lower of cost and net realisable value and its implications for financial statements and ratios
CFA® 2025 Level I Curriculum, Volume 2, Module 6.