The ratio that measures how many times a company replenishes its inventory in a year is the:
A) Asset turnover ratio.
B) Accounts receivable turnover ratio.
C) Inventory turnover ratio.
D) Days to collect ratio.

Question

Quizplus · Accepted Answer

The inventory turnover ratio measures how quickly a company sells and replenishes its inventory in a given year. The higher the ratio, the more efficient the company is in managing its inventory. A low ratio could indicate that inventory is being held for too long, leading to potential obsolescence or increased storage costs. Therefore, the correct answer is C, Inventory turnover ratio.

The Ratio That Measures How Many Times a Company Replenishes