If the inventory turnover is divided into 360, it becomes a measure of
A) the average collection period.
B) sales turnover.
C) sales efficiency.
D) the average age of the inventory.

Question

Quizplus · Accepted Answer

When the inventory turnover is divided into 360, it gives the average age of the inventory, which is the number of days it takes for the inventory to be sold and replaced. Therefore, the correct answer is D. The option A is incorrect as it refers to the average time taken by a company to receive payments from its customers. Option B is incorrect as sales turnover is the total value of sales made by a company during a specific period. Option C is incorrect as sales efficiency is a measure of how well a company uses its resources to generate sales.

If the Inventory Turnover Is Divided into 360, It Becomes