The Inventory Turnover Ratio Is Calculated by Dividing Cost of Goods

question 54

Multiple Choice

The inventory turnover ratio is calculated by dividing cost of goods sold by

• A)beginning inventory.
• B)ending inventory.
• C)average inventory.
• D)365 days.

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Definitions:

Common Stock

A form of corporate equity ownership, a type of security that represents ownership of a portion of a company.

Dividends Declared

The amount of earnings a company decides to distribute to its shareholders as measured at a specific point in time.

Retained Earnings

The portion of net income that is held back by a company to be reinvested in its operations or to pay down debt, rather than being distributed to shareholders as dividends.