Which of the Following Is Not True of Inventory Turnover

question 73

Multiple Choice

Which of the following is not true of inventory turnover?

• A) It measures how many times inventory has been replaced.
• B) It indicates how well inventory has been managed.
• C) A higher turnover number indicates a less efficient use of inventory.
• D) It is calculated by dividing cost of goods sold by average inventory value.

---

Definitions:

Quality of Income

A measure of how easily accounting income can be converted to cash, indicating the reliability of earnings.

Gross Profit Percentage

A financial metric that represents the proportion of money left over from revenues after accounting for the cost of goods sold, expressed as a percentage.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company.

Return on Equity Ratio

A measure of financial performance calculated by dividing net income by shareholders' equity, indicating how well a company uses investments to generate earnings growth.