Inventory turnover:
A) is the ratio of inventory to sales.
B) measures the success of a company in converting its investment in inventory into sales.
C) is the ratio of sales to inventory.
D) measures the success of the company's purchasing department.

Question

Quizplus · Accepted Answer

Inventory turnover measures how efficiently a company is converting its investment in inventory into sales. It is calculated by dividing the cost of goods sold by the average inventory during a specified period. A high inventory turnover ratio indicates that a company is selling its products quickly and efficiently, while a low ratio implies the opposite. It is a crucial metric for businesses to determine the health and efficiency of their inventory management.

Inventory Turnover