Inventory turnover measured annually is ______.
A)the ratio of (Annual Average Inventory Investment)to (Annual Cost of Goods Sold)
B)the ratio of (Annual Cost of Goods Sold)to (Annual Average Inventory Investment)
C)the product of (Annual Average Inventory Investment)and (Annual Cost of Goods Sold)
D)the product of (Annual Cost of Goods Sold)and (Annual Average Inventory Investment)

Question

Quizplus · Accepted Answer

Inventory turnover is calculated as the ratio of cost of goods sold to average inventory investment. Therefore, option B is the correct choice. Option A is the inverse of the correct formula, Option C and D both suggest a multiplication of the two factors, which is not the correct way to calculate inventory turnover.

Inventory Turnover Measured Annually Is ______