Which of the following correctly describes the rate of inventory turnover?
A) It is how quickly inventory is received from the supplier after the order is placed.
B) It is how many days it takes the inventory to travel between the seller's warehouse and the buyer's warehouse.
C) It is how rapidly inventory is sold.
D) It is how many days it takes from the time an order is received to the day it is shipped.

Question

Quizplus · Accepted Answer

Inventory turnover refers to how rapidly inventory is sold, or how quickly it is replaced or restocked with new inventory. It is a measure of a company's efficiency in managing its inventory and is calculated by dividing the cost of goods sold by the average inventory on hand. Options A, B, and D do not accurately describe inventory turnover.

Which of the Following Correctly Describes the Rate of Inventory