The inventory turnover ratio is represented by which of the following formulas?
A)Net credit sales / average inventory
B)Average inventory / net credit sales
C)Cost of goods sold / average inventory
D)Average inventory / cost of goods sold

Question

Quizplus · Accepted Answer

The inventory turnover ratio is calculated by dividing the cost of goods sold by the average inventory. This ratio is used to measure how efficiently a company is managing its inventory by comparing the value of goods sold to the average amount of inventory during a specific period. A higher ratio indicates that inventory is selling quickly and efficiently, while a lower ratio could suggest overstocking or stagnant inventory.

The Inventory Turnover Ratio Is Represented by Which of the Following