Question

This ratio determines the number of times stock is converted into revenue from operations during the accounting period under consideration.

• A. Investment Turnover Ratio
• B. Inventory Turnover Ratio
• C. Working Capital Turnover Ratio
• D. Trade Receivables Turnover Ratio

Hint:

Inventory Turnover Ratio indicates stock movement speed relative to sales, key for operational efficiency.

Answer 1

The Correct Option is B

Step 1: Comprehend Inventory Turnover Ratio
This metric quantifies the efficiency with which inventory is transformed into sales (revenue from operations) within a given period.
The calculation is as follows: \[\text{Inventory Turnover Ratio} = \frac{\text{Cost of Goods Sold}}{\text{Average Inventory}}\]Step 2: Summary
Consequently, the Inventory Turnover Ratio indicates how many times inventory is converted into revenue.