Inventory turnover ratio : This 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: Inventory turnover = Cost of goods sold Average inventory To Explain: The circumstances under which inventory turnover will be too high, and its consequences.

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Chapter 6, Problem 22Q

To determine

Inventory turnover ratio: This 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:

Inventory turnover = Cost of goods soldAverage inventory

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

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