Inventory turnover ratio
A)indicates how fast firms sell their inventory items.
B)measured in terms of the rate of movement of goods into and out of the firm.
C)equals cost of goods sold divided by the average inventory during the period.
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

The inventory turnover ratio measures the efficiency of a company in selling its inventory by calculating how many times a company has sold and replaced its inventory during a period. It is calculated by dividing the cost of goods sold by the average annual inventory. Therefore, options A, B and C are all correct and option D is the best choice as it covers all correct options.

Inventory Turnover Ratio