The inventory turnover is calculated by dividing
A) cost of goods sold by the ending inventory.
B) cost of goods sold by the beginning inventory.
C) cost of goods sold by the average inventory.
D) average inventory by cost of goods sold.

Question

Quizplus · Accepted Answer

Inventory turnover is calculated by dividing the cost of goods sold by the average inventory. This formula helps businesses to assess how quickly they are selling their inventory and restocking it. Option A is incorrect because it does not take into account the average value of the inventory during the time period. Option B is incorrect because it uses the beginning inventory, which may not accurately reflect the average inventory level during the period. Option D is also incorrect because it's not the appropriate formula for inventory turnover.

The Inventory Turnover Is Calculated by Dividing