Accounting for IGCSE & O level - Advanced Principles (Section 3 - No. 32)
What is the purpose of the inventory turnover ratio?
To measure the speed at which inventory is sold and replaced.
To determine the profitability of inventory.
To measure how much cash is tied up in inventory.
To determine the value of inventory on hand.
Forklaring
The inventory turnover ratio measures how efficiently a company is managing its inventory by measuring how many times a company's inventory is sold and replaced over a period of time.