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: Understand Inventory Turnover Ratio
It measures how efficiently inventory is converted into sales (revenue from operations) during the period.
It is calculated as: \[ \text{Inventory Turnover Ratio} = \frac{\text{Cost of Goods Sold}}{\text{Average Inventory}} \] Step 2: Conclusion
Therefore, Inventory Turnover Ratio determines the number of times stock is converted into revenue.