The inventory turnover rate for a firm is 14.5 as compared to the relevant industry rate of 13.2. In this case, the firm is
A) selling its inventory slower than the industry.
B) underperforming the industry.
C) averaging fewer days of sales in inventory than the industry.
D) generating fewer sales per dollar of inventory.

Question

Quizplus · Accepted Answer

The inventory turnover rate indicates how many times a company sells and replaces its inventory over a period. A higher turnover rate (14.5 vs. 13.2) suggests the firm is selling its inventory more quickly than the industry average, thus averaging fewer days of sales in inventory.

The Inventory Turnover Rate for a Firm Is 14