The ________ measures the activity, or liquidity, of a firm's stock of goods.
A) average collection period
B) inventory turnover ratio
C) average payment period
D) total asset turnover ratio

Question

Quizplus · Accepted Answer

The inventory turnover ratio measures how efficiently a firm is selling and replenishing its inventory. A high ratio indicates that the firm is selling its inventory quickly and efficiently, while a low ratio may indicate that the firm is struggling to sell its inventory. The other options listed measure different aspects of a firm's financial activity and do not directly relate to the liquidity of the firm's stock of goods.

The ________ Measures the Activity, or Liquidity, of a Firm's