An Inventory Turnover Ratio

question 8

Multiple Choice

An inventory turnover ratio

• A) measures the number of times, on average, the inventory was sold during the period.
• B) is a measure of solvency that focuses on efficient use of inventory.
• C) that is significantly lower than the industry average usually indicates difficulty with selling that inventory and the likelihood of incurring lower than average storage costs.
• D) that is significantly higher than the industry average may indicate that a company is maintaining inventory levels that are too high.

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