The inventory turnover ratio is calculated as:
A) Cost of goods sold divided by average merchandise inventory.
B) Sales divided by cost of goods sold.
C) Ending inventory divided by cost of goods sold.
D) Cost of goods sold divided by ending inventory.
E) Cost of goods sold divided by ending inventory times 365.

Question

Quizplus · Accepted Answer

The inventory turnover ratio measures the number of times a company sells its average inventory during a specific period. The formula for calculating the inventory turnover ratio is dividing the cost of goods sold by the average merchandise inventory. Therefore, the correct choice is A.

The Inventory Turnover Ratio Is Calculated As