Question

     If the inventory turnover is divided by 365, it

    becomes a measure of
    A Revenue from operations efficiency Correct Answer Incorrect Answer
    B The average age of the inventory Correct Answer Incorrect Answer
    C Days of credit period Correct Answer Incorrect Answer
    D The average collection period Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    The average age of the inventory is the average number of days it takes for an entity to completely sell off its stock or inventory. It is a measure that is used to determine the performance of the revenue from operations or sales. The average age of inventory can also be termed as DSI (Day’s Sale in Inventory).

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