Question

Inventory turnover ratio = ___

• A. $\left(\frac{\text{Operating Profit}}{\text{Average Inventory}}\right)\times 100$
• B. $\left(\frac{\text{Cost of goods sold}}{\text{Average Inventory}}\right)\times 100$
• C. $\left(\frac{\text{Cost of goods sold}}{\text{Net sales}}\right)\times 100$
• D. None of these

Answer 1

The correct option is B

$\left(\frac{\text{Cost of goods sold}}{\text{Average Inventory}}\right)\times 100$

$\text{Inventory Turnover Ratio}=\left(\frac{\text{Cost of goods sold}}{\text{Average Inventory}}\right)$