An inventory turnover ratio of 8.5 times indicates that:
A) the inventory of the firm turns over after 8.5 days.
B) the value of the inventory of the firm is 8.5 percent of the total assets of the firm.
C) the value of sales of the firm is 8.5 times the value of its sales.
D) the firm will restock its inventory every 43 days.
E) the firm will sell its inventory once in 43 days.

Question

Quizplus · Accepted Answer

The inventory turnover ratio indicates how many times a company sells and replaces its inventory within a given period. An inventory turnover ratio of 8.5 times means that the firm will restock its inventory every 43 days (365 days / 8.5). Therefore, option D is the best choice.

An Inventory Turnover Ratio of 8