The relationship between the volume of goods sold and inventory may be stated as inventory turnover.

Question

Quizplus · Accepted Answer

The inventory turnover ratio measures the number of times a company sells and replaces its inventory during a certain period. It is calculated as the cost of goods sold divided by the average inventory value. Therefore, the relationship between the volume of goods sold (cost of goods sold) and inventory is used to calculate the inventory turnover ratio.

The Relationship Between the Volume of Goods Sold and Inventory