The ___________ measures the activity of a firm’s inventory.

average collection period

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inventory turnover ratio

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current ratio

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liquid ratio

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Solution

The correct option is B
inventory turnover ratio

The inventory turnover ratio measures the activity of a firm’s inventory.

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Similar questions

A trading firm’s average inventory is Rs 20,000 (cost). If the inventory turnover ratio is 8 times and the firm sells goods at a profit of 20% on sale, ascertain the profit of the firm.

Q. Following information is given about a company:

	₹		₹
Revenue From Operations, i.e., Net Sales Gross Profit	1,50,000	Opening Inventory	29,000
Cost of Revenue From Operations	30,000	Closing Inventory	31,000
(Cost of Goods Sold)	1,20,000	Debtors	16,000

From the above information, calculate following ratios:

(i) Gross Profit Ratio,

(ii) Inventory Turnover Ratio, and

(iii) Trade Receivables Turnover Ratio.

Inventory Turnover Ratio is an activity ratio. State true or false.

Q. The current ratio provides a better measure of overall liquidity only when a firm’s inventory cannot easily be converted into cash. If inventory is liquid, the quick ratio is a preferred measure of overall liquidity. Explain.

Q. Calculate Gross Profit Ratio from the following data:
Average Inventory ₹3,20,000; Inventory Turnover Ratio 8 Times; Average Trade Receivables ₹4,00,000; Trade Receivables Turnover Ratio 6 Times; Cash Sales 25% of Net Sales.

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The ___________ measures the activity of a firm’s inventory.

The correct option is B inventory turnover ratio The inventory turnover ratio measures the activity of a firm’s inventory.

The correct option is B
inventory turnover ratio

The inventory turnover ratio measures the activity of a firm’s inventory.