The formula for inventory turnover is:

Question

Quizplus · Accepted Answer

Inventory turnover is calculated by dividing the cost of goods sold by the average inventory. Choice A is the only option that includes both of these values in the formula. Choice B uses cost of goods manufactured instead of cost of goods sold, and choice C divides cost of goods sold by cost of goods manufactured (which would result in a fraction less than 1 in most cases). Choice D multiplies average inventory by cost per unit, which does not provide a measure of how many times inventory was sold and replaced during the period.

The Formula for Inventory Turnover Is