How would you interpret an inventory turnover ratio of 10.7?
A)it takes 50 days on average to collect receivables.
B)inventory is converted into sales every 50 days.
C)the firm has sufficient inventories to maintain sales for 34.1 days.
D)assets are converted into sales every 50 days.

Question

Quizplus · Accepted Answer

The inventory turnover ratio of 10.7 means that the inventory is turned over 10.7 times a year. To find the number of days inventory is held, divide 365 by the turnover ratio: 365/10.7 ≈ 34.1 days.

How Would You Interpret an Inventory Turnover Ratio of 10