The inventory turnover ratio is calculated by
A) dividing cost of goods sold by revenues.
B) dividing average inventory by cost of goods sold.
C) dividing revenues by cost of goods sold.
D) dividing cost of goods sold by average inventory.
E) dividing revenues by average inventory.

Question

Quizplus · Accepted Answer

The inventory turnover ratio measures how quickly a company can sell its inventory and is calculated by dividing the cost of goods sold by the average inventory. Therefore, choice D is the correct answer.

The Inventory Turnover Ratio Is Calculated by