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Basic Question 0 of 18

An overstatement of ending inventory would result in an ______.

A. overstatement of total asset turnover
B. understatement of quick ratio
C. understatement of current ratio
D. overstatement of profit margin
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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 !
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Learning Outcome Statements

calculate and interpret the sources of return from investing in a fixed-rate bond;

CFA® 2025 Level I Curriculum, Volume 4, Module 10.