The inventory turnover ratio compares:
A)Sales to average inventory
B)Cost of goods sold to average inventory
C)Average receivables to average inventory
D)Average assets to average inventory

Question

Quizplus · Accepted Answer

The inventory turnover ratio compares the cost of goods sold to the average inventory. This ratio is used to measure how quickly a company is able to sell its inventory and is an important indicator of a company's efficiency and financial health. A high inventory turnover ratio indicates that a company is selling its inventory quickly, while a low ratio suggests that a company may be holding onto too much inventory and may have trouble selling it in the future.

The Inventory Turnover Ratio Compares