Chapter 6, Problem 18Q

To determine

Inventory turnover ratio:

Inventory turnover ratio is a financial measure that is used to evaluate as to how many times a company sells or uses its inventory, during an accounting period. It is calculated by using the following formula:

$\boxed{\text{Inventory turnover}=\frac{\text{Cost of goods sold}}{\text{Average inventory}}}$

To Explain: The circumstances under which inventory turnover will be too high, and its consequences.