Zimt AG wrote down the value of its inventory in 2007 and reversed the write-downin 2008. Compared to the ratios that would have been calculated if the write-down hadnever occurred, Zimt’s reported 2007:A. current ratio was too high.B. gross margin was too high.C. inventory turnover was too high.

Zimt AG wrote down the value of its inventory in 2007 and reversed the write-downin 2008. Compared to the ratios that would have been calculated if the write-down hadnever occurred, Zimt’s reported 2007:A. current ratio was too high.B. gross margin was too high.C. inventory turnover was too high.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Zimt AG wrote down the value of its inventory in 2007 and reversed the write-down
in 2008. Compared to the ratios that would have been calculated if the write-down had
never occurred, Zimt’s reported 2007:
A. current ratio was too high.
B. gross margin was too high.
C. inventory turnover was too high.

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