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 formula for inventory turnover is: Cost of Goods Sold / Average Inventory. This calculation measures how long a company holds inventory before selling it. Therefore, the best choice is B.

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