The inventory turnover ratio is calculated as:

A) Cost of goods sold divided by average merchandise inventory.
B) Sales divided by cost of goods sold.
C) Ending inventory divided by cost of goods sold.
D) Cost of goods sold divided by ending inventory.
E) Cost of goods sold divided by ending inventory times 365.

Cost Of Goods Sold

This refers to the direct costs attributable to the production of the goods sold by a company, including materials and labor.

Average Merchandise Inventory

The mean value of a company's inventory over a certain period, calculated to assess inventory levels and cost of goods sold.

Turnover Ratio Calculation

A measurement that calculates how frequently an asset or portfolio is replaced or traded during a specific period.