Which of the following is NOT true about the inventory turnover ratio?
A) It is calculated by dividing inventory by cost of goods sold.
B) It measures how many times the inventory is turned over into saleable products.
C) The more times a firm can turn over its inventory, the better.
D) Too high a turnover or too low a turnover could be a warning sign.

Question

Quizplus · Accepted Answer

The inventory turnover ratio is calculated by dividing cost of goods sold by inventory, not the other way around.

Which of the Following Is NOT True About the Inventory