Which of the following is the best explanation of a company's inventory turnover of 12.0 for the year 2017?
A)the company averages about 12 months' sales in inventory.
B)The company averages about 12 days' sales in inventory.
C)The company averages about one month's sales in inventory.
D)The company averages about 12 days from the time an item is sold until the cash is collected.
E)None of the answer choices is correct.

Question

Quizplus · Accepted Answer

A high inventory turnover ratio indicates that a company is selling its inventory quickly, which means that it is not accumulating inventory, but rather replenishing it regularly. An inventory turnover of 12.0 indicates that the company sells its entire inventory an average of 12 times per year, or about once per month.

Which of the Following Is the Best Explanation of a Company's