Which of the following statements is correct concerning the days' sales in raw materials inventory ratio?
A)It measures how long it takes raw materials to be used in production.
B)The ratio is not useful for a manufacturer.
C)Reveals how many times a company turns over its raw materials inventory in a period.
D)Most companies generally prefer a higher number of days' sales in raw materials inventory.
E)Is calculated by taking the Raw materials used/Average raw materials inventory.

Question

Quizplus · Accepted Answer

The days' sales in raw materials inventory ratio measures the average number of days it takes for a company to use up its raw materials inventory in production. This metric is crucial for understanding inventory efficiency and management within manufacturing and production processes.

Which of the Following Statements Is Correct Concerning the Days