The average number of times a company's inventory is sold during an accountingperiod, calculated by dividing cost of goods sold by the average merchandise inventory balance, is the:
A) Merchandise turnover.
B) Current ratio.
C) Price-earnings ratio.
D) Days' sales uncollected.
E) Accounts receivable turnover.

Question

Quizplus · Accepted Answer

Merchandise turnover, also known as inventory turnover, measures how many times a company's inventory is sold and replaced over a period. It is calculated by dividing the cost of goods sold by the average inventory.

The Average Number of Times a Company's Inventory Is Sold