The average age of inventory can be calculated as 365 divided by inventory turnover.

Question

Quizplus · Accepted Answer

The formula for calculating the average age of inventory is 365 (the number of days in a year) divided by the inventory turnover ratio. This ratio tells us how many times the inventory is sold and replaced over a given period (usually one year). By dividing the number of days in a year by this ratio, we can determine the average number of days it takes for inventory to be sold and replaced, which is the average age of inventory. Therefore, the statement is true.

The Average Age of Inventory Can Be Calculated as 365