The Inventory Turnover Ratio Measures

question 104

Multiple Choice

The inventory turnover ratio measures:

• A)The portion of inventory that becomes obsolete each period.
• B)How many times the company purchases inventory during the current reporting period.
• C)The times per period the average inventory balance is sold.

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Definitions:

Debt

Debt represents money borrowed by one party from another, under the condition that it is to be paid back with interest, typically used for business operations or purchases.

Operating Leverage

A measure of how sensitive a company's operating income is to a change in its sales volume.

Labor-saving Equipment

Tools or machinery designed to reduce the amount of labor needed to perform a job, often leading to enhanced efficiency and lower labor costs.

Analytical Technique

Methods or procedures used to systematically analyze data or solve problems through logical reasoning and empirical evidence.