Inventory turnover is calculated as:
A)average inventory for the period divided by gross profit for the period.
B)gross profit for the period divided by average inventory for the period.
C)average inventory for the period divided by cost of goods sold.
D)cost of goods sold divided by average inventory for the period.

Question

Quizplus · Accepted Answer

Inventory turnover is calculated by dividing the cost of goods sold by the average inventory for the period. This ratio indicates how many times a company's inventory is sold and replaced over a certain period of time. A higher inventory turnover ratio indicates that a company is selling its products more quickly, while a lower ratio may indicate that inventory is not moving as well and may need to be adjusted.

Inventory Turnover Is Calculated As