Asked by Gaoussou Doucoure on May 08, 2024
Verified
The average number of times a company's inventory is sold during an accounting period, calculated by dividing cost of goods sold by the average inventory balance, is the:
A) Accounts receivable turnover.
B) Inventory turnover.
C) Days' sales uncollected.
D) Current ratio.
E) Price earnings ratio.
Accounting Period
An Accounting Period is a specific time span for which financial statements are prepared to understand and analyze a company's financial performance.
- Execute the computation and analysis of different financial ratios, encompassing liquidity, solvency, and profitability measures.
Verified Answer
NI
Nipuna Ilukpitiye GedaraMay 11, 2024
Final Answer :
B
Explanation :
The inventory turnover ratio measures how efficiently a company is managing its inventory. It is calculated by dividing the cost of goods sold by the average inventory balance. This ratio indicates how many times a company's inventory was sold and replaced during a period, and it is important because it can help identify whether a company is overstocking or understocking its inventory.
Learning Objectives
- Execute the computation and analysis of different financial ratios, encompassing liquidity, solvency, and profitability measures.
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