The inventory turnover ratio is calculated by dividing the cost of goods sold by
A) beginning inventory.
B) ending inventory.
C) average inventory.
D) number of days in the year.

Question

Quizplus · Accepted Answer

The inventory turnover ratio formula is: Cost of goods sold / Average inventory. This is because the turnover ratio measures how efficiently a company is using its inventory to generate sales, and using the average inventory throughout the period gives a more accurate picture than just using the beginning or ending inventory numbers.

The Inventory Turnover Ratio Is Calculated by Dividing the Cost