The inventory turnover ratio is calculated by dividing cost of goods sold by
A) beginning inventory.
B) 365 days.
C) ending inventory.
D) average inventory.

Question

Quizplus · Accepted Answer

The inventory turnover ratio is calculated by dividing cost of goods sold by average inventory. This gives a measure of how quickly a company is selling and replenishing its inventory over a given period of time. Using the beginning or ending inventory alone does not provide a complete picture of inventory management. Therefore, option D is the best choice.

The Inventory Turnover Ratio Is Calculated by Dividing Cost of Goods