Small question on ratios. In the working capital management reading in corporate finance they introduce some efficiency ratios. However, these ratios differ from those in the FRA book. For instance, in the Corp. Fin. book we have DOH=Inventory/(COGS/365) but in the FRA book we have DOH= Numbers of days in period/Inventory Turnover. Same thing for DSO.
When doing EOC questions on DOH, I tried both method but it led to 2 different answers (despite the fact that both answers were relatively close: 39 and 41 and that it led to the same correct answer). Can using one formula over another lead to errors or does the way CFAI construct questions takes into account that small difference in formula ?
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