Seeing is believing!
Before you order, simply sign up for a free user account and in seconds you'll be experiencing the best in CFA exam preparation.
Basic Question 0 of 8
An overstatement of ending inventory would result in an ______.
B. understatement of quick ratio
C. understatement of current ratio
D. overstatement of profit margin
A. overstatement of total asset turnover
B. understatement of quick ratio
C. understatement of current ratio
D. overstatement of profit margin
User Contributed Comments 5
| User | Comment |
|---|---|
| rainatt | ASSET TURNOVER=NET SALES/AVERAGE TOTAL NET ASSET |
| sarath | quick ratio = cash+marketable securities + Receivables / CL No inventory component so no effect on the quick ratio ... |
| guna | (OB+Purchases) - COGS = EI. If EI overstated, (OB+purchases) remains constant, only COGS should have been reduced to get an inflated EI. In the Income Statement COGS is like an expense, understating an expense would overstate Income |
| johntan1979 | :( I got this wrong because I confused profit margin with gross margin and thought net income should be NET profit margin, not just profit margin. |
| Inaganti6 | Wow i got something right and Johntan1979 didn't. Maybe I do stand a chance in this exam ! |
I am happy to say that I passed! Your study notes certainly helped prepare me for what was the most difficult exam I had ever taken.
Andrea Schildbach
Learning Outcome Statements
explain systematic and nonsystematic risk, including why an investor should not expect to receive additional return for bearing nonsystematic risk
CFA® 2025 Level I Curriculum, Volume 2, Module 2.