In 20A,C Co.had an inventory turnover ratio of 6.11 while P Co.had a ratio of 10.67.Which of the following might most accurately explain the difference in their ratios?
A)C Co.had less inventory on hand in relation to their amount of cost of goods sold.
B)C Co.has a lower sales figure so cost of goods sold is lower leading to a higher turnover ratio.
C)C Co.takes a longer number of days to sell their inventory.
D)C Co.has a poor credit rating.

Question

Quizplus · Accepted Answer

C Co. takes a longer number of days to sell their inventory, which results in a lower inventory turnover ratio compared to P Co.