The inventory turnover ratio:
A) Reveals how many times a company sells its merchandise inventory during a period.
B) Is used to measure solvency.
C) Calculation depends on the company's inventory valuation method.
D) Is used to analyze profitability.
E) Reveals how many days a company can sell inventory if no new merchandise is purchased.

Question

Quizplus · Accepted Answer

The inventory turnover ratio is a measure of how efficiently a company is managing its inventory. It reveals how many times the company sells its merchandise inventory during a given period, indicating how quickly the company is turning over its inventory.

The Inventory Turnover Ratio