How long a company holds inventory before selling it can be measured by dividing cost of goods sold by the average inventory balance to determine the:
A)Accounts receivable turnover.
B)Inventory turnover.
C)Days' sales uncollected.
D)Current ratio.
E)Price earnings ratio.

Question

Quizplus · Accepted Answer

The calculation described in the question is the formula for inventory turnover, which measures how quickly a company is selling its inventory. Therefore, choice B is the correct answer. The other choices (A, C, D, and E) are not related to measuring inventory turnover.

How Long a Company Holds Inventory Before Selling It Can