How long a company holds inventory before selling it can be measured by dividing cost of goods sold by the average inventory balance to determine the:
A) Current ratio.
B) Price earnings ratio.
C) Accounts receivable turnover.
D) Inventory turnover.
E) Days' sales uncollected.

Question

Quizplus · Accepted Answer

Inventory turnover is a measure of how quickly a company sells its inventory, and is calculated by dividing the cost of goods sold by the average inventory balance. This metric is important for assessing a company's operating efficiency and inventory management strategy.

How Long a Company Holds Inventory Before Selling It Can