The inventory turnover ratio compares:
A) current assets to average inventory.
B) cost of goods sold to average inventory.
C) average receivables to average inventory.
D)average assets to average inventory.

Question

Quizplus · Accepted Answer

The inventory turnover ratio is calculated by dividing the cost of goods sold by the average inventory. This ratio shows how many times a company sells and replaces its inventory in a given period. It is a measure of how efficiently a company manages its inventory. Options A, C, and D relate to other ratios such as current ratio, accounts receivable turnover ratio, and asset turnover ratio, respectively.

The Inventory Turnover Ratio Compares