Inventory Turnover can be calculated by:
A)Ratio of average inventory cost over cost of goods sold
B)Ratio of cost of goods sold over average inventory cost
C)Ratio of inventory days in stock over average inventory cost
D)Ratio of average inventory cost over inventory days in stock

Question

Quizplus · Accepted Answer

Inventory Turnover is calculated by dividing the cost of goods sold by the average inventory cost. Hence, the ratio of cost of goods sold over average inventory cost (Option B) is the correct formula for calculating Inventory Turnover. Option A, C, and D do not provide the correct formula for the calculation of Inventory Turnover.

Inventory Turnover Can Be Calculated By