The inventory turnover is computed by dividing the cost of goods sold by
A) beginning inventory.
B) ending inventory.
C) average inventory.
D) number of days in the year.

Question

Quizplus · Accepted Answer

The inventory turnover is calculated by dividing the cost of goods sold by the average inventory. The average inventory is derived by adding the beginning and ending inventory and dividing by two. This ratio indicates how many times a company sells and replaces its inventory during a period.

The Inventory Turnover Is Computed by Dividing the Cost of Goods