The sales-to-inventory ratio:
A)is superior to the inventory turnover ratio.
B)as a determination of financial performance, is good comparison tool.
C)is technically inferior to other commonly used ratios.
D)was developed by the Dupont Corporation and is satisfactory when used to make comparisons between the firm and the industry as a whole.

Question

Quizplus · Accepted Answer

The sales-to-inventory ratio is not a commonly used ratio and is therefore technically inferior to other commonly used ratios such as the inventory turnover ratio. The inventory turnover ratio provides a more accurate measure of a company's ability to efficiently manage its inventory.

The Sales-To-Inventory Ratio