An increasing inventory turnover ratio indicates:
A)longer time span between the ordering and receiving of inventory.
B)shorter time span between the ordering and receiving of inventory.
C)shorter time span between the purchase and sale of inventory.
D)longer time span between the purchase and sale of inventory.

Question

Quizplus · Accepted Answer

Inventory turnover ratio is a measure of how quickly a company sells its inventory. A higher inventory turnover ratio indicates that the company is selling off its inventory more quickly, which means there is a shorter time span between the purchase and sale of inventory. Therefore, option C is the correct choice.

An Increasing Inventory Turnover Ratio Indicates