How would you interpret an inventory turnover ratio of 10.7?
A) It takes 50 days on average to collect receivables.
B) Inventory is converted into sales every 50 days.
C) The firm has sufficient inventories to maintain sales for 34.1 days.
D) Assets are converted into sales every 50 days.

Question

Quizplus · Accepted Answer

Days' sales in inventory = 365 days / 10.7 = 34.1 days

How Would You Interpret an Inventory Turnover Ratio of 10