A firm's inventory turnover:
A) Is computed by dividing cost of goods sold by the end-of-year inventory
B) Is affected by the inventory costing method used
C) Becomes the days' sales in inventory when multiplied by 365
D) Is generally interpreted as favorable if it is smaller than the industry average
E) None of the above

Question

Quizplus · Accepted Answer

The inventory turnover ratio is affected by the inventory costing method used because different methods (FIFO, LIFO, etc.) can result in different cost of goods sold and inventory values.

A Firm's Inventory Turnover