By dividing cost of goods sold by the average inventory to measure the speed with which inventory moves through the company and is turned into sales, which of the following ratios is calculated?

Question

Quizplus · Accepted Answer

The inventory turnover ratio is calculated by dividing the cost of goods sold by the average inventory, and it measures the speed with which inventory moves through the company and is turned into sales. This ratio is important for managing inventory levels and identifying problems with inventory management. The other choices are unrelated to this specific calculation.

By Dividing Cost of Goods Sold by the Average Inventory