What is the formula for inventory turnover?
A) annual cost of goods sold / average inventory in dollars
B) annual sales / average inventory in dollars
C) average inventory in dollars / annual cost of goods sold
D) average inventory in dollars / annual sales
E) annual cost of goods sold / annual holding cost

Question

Quizplus · Accepted Answer

Inventory turnover is calculated by dividing the cost of goods sold by the average inventory during the same period. Therefore, the formula for inventory turnover is annual cost of goods sold divided by average inventory in dollars.

What Is the Formula for Inventory Turnover