As the inventory turnover increases, the average sales period decreases.

Question

Quizplus · Accepted Answer

Inventory turnover is calculated by dividing the cost of goods sold by the average inventory. A higher inventory turnover indicates that a company is selling its inventory more quickly, which means that the average sales period (the time it takes to sell one item) is shorter. Therefore, as inventory turnover increases, the average sales period decreases.

As the Inventory Turnover Increases, the Average Sales Period Decreases