The ratio that measures how rapidly inventory is sold is the:
A)cost of goods sold.
B)inventory turnover.
C)days' sales in inventory.
D)current ratio.

Question

Quizplus · Accepted Answer

The inventory turnover ratio measures how quickly a company is able to sell its inventory. This ratio is calculated by dividing the cost of goods sold by the average inventory level. A high inventory turnover ratio indicates that a company is selling its inventory quickly, while a low ratio indicates that inventory is sitting on shelves for longer periods of time.

The Ratio That Measures How Rapidly Inventory Is Sold Is