A company that has average inventory of $500 and cost of goods sold of $2,000 would have an inventory turnover ratio of 0.25.

Name: A company that has average inventory of $500 and cost of goods sold of $2,000 would have an inventory turnover ratio of 0.25.
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Question

Quizplus · Accepted Answer

The inventory turnover ratio equals cost of goods sold divided by average inventory. The correct calculation in this example would be $2,000 divided by $500, which equals 4. Therefore, the correct answer is B, not A.

A Company That Has Average Inventory of $500 and Cost