The ________ measures the activity, or liquidity, of a firm's inventory.
A) average collection period
B) inventory turnover
C) quick ratio
D) current ratio

Question

Quizplus · Accepted Answer

Inventory turnover measures how many times a company sells and replaces its inventory over a period of time. This indicates how efficiently a company is managing its inventory and generating sales. A higher inventory turnover ratio indicates that a company is selling its inventory quickly and efficiently, while a lower ratio may suggest problems such as overstocking or slow sales. The other options (A, C, D) do not provide information specifically about a firm's inventory activity.

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