Inventory Turnover: Inventory turnover ratio helps in measuring the efficiency of the company in managing the inventory of the company. It is calculated by comparing cost of goods sold with average inventory of the period. This ratio measures how many times a company's inventory is sold and replaced in an accounting period. The ratio is calculated as under − To discuss: How does inventory turnover provide information about a company's short-term liquidity?

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Chapter 17, Problem 10DQ

To determine

Concept Introduction:

Inventory Turnover:

Inventory turnover ratio helps in measuring the efficiency of the company in managing the inventory of the company. It is calculated by comparing cost of goods sold with average inventory of the period. This ratio measures how many times a company's inventory is sold and replaced in an accounting period.

The ratio is calculated as under −

To discuss:

How does inventory turnover provide information about a company's short-term liquidity?

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