Tammy is a production manager at Eagle's Nest, Inc. She is concerned that too much money is being wasted on inventory that is sitting in the warehouse too long. She should calculate:
A) the current ratio.
B) inventory turnover.
C) the conversion ratio.
D) return on assets.
E) the debt ratio.

Question

Quizplus · Accepted Answer

Tammy's concern about inventory indicates that she needs to calculate the inventory turnover ratio, which measures how many times a company sells and replaces its inventory during a given period. A high inventory turnover ratio indicates that a company is efficiently managing its inventory and is not holding excess inventory. Therefore, B (inventory turnover) is the best choice. A (current ratio), C (conversion ratio), D (return on assets), and E (debt ratio) do not relate to Tammy's concern about inventory management.

Tammy Is a Production Manager at Eagle's Nest, Inc