The Inventory Turnover Is Calculated By Dividing Cost Of Goods Sold By
Question (MCQ): The Inventory Turnover Is Calculated By Dividing Cost Of Goods Sold By A) Beginning Inventory B) Ending Inventory C) Average Inventory ✅ D) 365 Days Correct Answer: C) Average Inventory The correct option of this multiple choice question (MCQ) is (C) Average Inventory because the Inventory Turnover Ratio (ITR) measures how efficiently a company sells and replaces its inventory during an accounting period. Instead of using only the beginning or ending inventory balance, the ratio uses Average Inventory to provide a more accurate representation of the inventory available throughout the period. Since inventory levels usually change because of purchases, sales, returns, and adjustments, relying on only the beginning or ending inventory could produce misleading results. Average Inventory smooths out these fluctuations and gives a fairer measurement of inventory management efficiency. Inventory Turnover Ratio Formula The formula for calculating the Inventory Turnover Ra...