An inventory turnover ratio of 8.5 times indicates that:
A)the inventory of the firm turns over every 8.5 days.
B)the value of the inventory of the firm is 8.5 percent of the total assets of the firm.
C)the value of sales of the firm is 8.5 times the cost of goods sold.
D)the firm will restock its inventory every 42.35 days.
E)the firm pays for its inventory once in 42.35 days.

Question

Quizplus · Accepted Answer

An inventory turnover ratio of 8.5 times means the company sells and replaces its inventory 8.5 times a year. To find how often this happens in days, divide the number of days in a year (365) by the turnover ratio (8.5), which gives approximately 42.35 days.

An Inventory Turnover Ratio of 8