By dividing cost of goods sold by the average inventory to measure the speed with which inventory moves through the company and is turned into sales,which of the following ratios is calculated?

Question

Quizplus · Accepted Answer

The inventory turnover ratio is calculated by dividing the cost of goods sold by the average inventory. This ratio is used to measure how quickly inventory is being sold and replaced within the company. A higher inventory turnover ratio indicates that a company is efficiently managing its inventory and generating more sales.

By Dividing Cost of Goods Sold by the Average Inventory