If inventory turnover is equal to 3,that means that the company keeps a three-month supply of inventory on hand.

Question

Quizplus · Accepted Answer

Inventory turnover is calculated by dividing the cost of goods sold by the average inventory level. Therefore, a turnover of 3 indicates that the company sells and replaces its inventory approximately every four months (3 times a year). It does not indicate how much inventory is kept on hand.

If Inventory Turnover Is Equal to 3,that Means That the Company