What is an average inventory?
A)The sum of the current inventory and the beginning inventory divided by 2.
B)The sum of the current inventory and the ending inventory divided by 4.
C)The sum of the beginning inventory and the current inventory divided by 10.
D)Both A and C.

Question

Quizplus · Accepted Answer

One of the component measures used in computing the inventory turnover ratio is average inventory. The average inventory of a company is calculated by dividing the sum of the current level of inventory and the level of the beginning inventory by 2. For example, if an inventory at the beginning of the relevant financial period was $50,000 and inventory at the end of the financial period was $30,000, average inventory would be equal to $40,000: ((50,000 + 30,000) / 2 = 40,000).

What Is an Average Inventory