The Inventory Turnover Rate Is Computed By

question 9

Multiple Choice

The inventory turnover rate is computed by:

• A) dividing average inventory by cost of goods sold.
• B) dividing cost of goods sold by average inventory.
• C) dividing ending inventory by cost of goods sold.
• D) dividing ending inventory by beginning inventory.
• E) dividing beginning inventory by cost of goods sold.

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Definitions:

Fiscal Year

A fiscal year refers to a 12-month period utilized by businesses and governments for the purposes of financial reporting and budgeting, and it doesn't always align with the calendar year.

Depreciation

The process of allocating the cost of a tangible asset over its useful life, reflecting the decrease in value of the asset over time.

Balance Sheet

A financial report that offers a glimpse into a company's financial health at a given moment, breaking down the company's assets, debts, and owner's equity.

Equipment

Durable goods used in the operation of a business, not intended for sale, often contributing to the production of other goods or services.