Inventory turnover at retail is equal to net sales divided by:
A)Beginning inventory at retail
B)Average inventory at retail
C)Beginning inventory at cost
D)Average inventory at cost
E)None of these

Question

Quizplus · Accepted Answer

Inventory turnover at retail is usually calculated by dividing net sales by average inventory at retail. This ratio helps retailers understand how quickly they are selling their merchandise and how effective their inventory management practices are. Using beginning inventory at retail or beginning inventory at cost may not give an accurate representation of the inventory turnover rate for the entire period, and using average inventory at cost may not reflect the actual value of the inventory sold during the period.

Inventory Turnover at Retail Is Equal to Net Sales Divided