How is inventory turnover ratio calculated?
A)By dividing the cost of goods sold by the average inventory.
B)By multiplying the beginning and ending inventory, then dividing by 4.
C)Both by A and B.
D)It cannot be calculated

Question

Quizplus · Accepted Answer

The inventory turnover ratio is calculated by simply dividing the cost of goods sold by the average inventory. If the cost of goods sold is equal to $60,000 and the average inventory is equal to $65,000, the inventory turnover ratio will be equal to 92.3 percent (60000 / 65000 = 92.3%).

How Is Inventory Turnover Ratio Calculated