inventory turnover ratio

What does the inventory turnover ratio measure?

• The number of times inventory is sold and replaced during a period

• The amount of inventory a company has on hand at a particular point in time

• The cost of goods sold divided by the average inventory value

• The average number of days it takes to sell inventory

A company has a cost of goods sold of $500,000 and an average inventory value of $100,000. What is its inventory turnover ratio?

• 0.2

• 2

• 5

• 20

A company has an inventory turnover ratio of 8 and an average inventory value of $50,000. What is its cost of goods sold?

• $400,000

• $100,000

• $62,500

• $6,250

What is the formula for calculating the stock turnover period?

• Days or Month's in the Year / inventory turnover ratio

• Days or Month in the year / cost of goods sold

• Average inventory value / cost of goods sold

• Cost of goods sold / average inventory value

The formula for calculating the stock turnover ratio is:

• Sales / Inventory

• Inventory / Sales

• Cost of goods sold / Inventory

• Inventory / Cost of goods sold

A company has sales of $500,000 and an average inventory of $100,000. What is its stock turnover ratio?

• 0.2

• 2

• 5

• 10

A company's cost of goods sold for the year is $1,000,000 and its average inventory is $250,000. What is its stock turnover ratio?

• 4

• 10

• 20

• 40

State the following statement is True or False.

Ratios help in comparisons of a firm’s results over a number of accounting periods as well as with other business enterprises.

• True

• False

State the following statement is True or False.

A ratio reflects quantitative and qualitative aspects of results.

• True

• False

The _________ of business firm is measured by its ability to satisfy its short term obligations as they become due:

• Activity

• Liquidity

• profitability

• Solvency