The inventory turnover amount is needed to calculate the
A)days' sales uncollected.
B)days' inventory on hand.
C)receivables turnover.
D)interest coverage ratio.

Question

Quizplus · Accepted Answer

The inventory turnover ratio is used to calculate the number of times inventory is sold and replaced during a certain period. By dividing the cost of goods sold by the average inventory, we get the inventory turnover ratio. Once we have this ratio, we can calculate the days' inventory on hand by dividing 365 (days in a year) by the inventory turnover ratio. Therefore, the answer is B - days' inventory on hand.

The Inventory Turnover Amount Is Needed to Calculate the