Question : The inventory turnover ratio can be used to determine?
Option 1: Sales effectiveness
Option 2: Average Age of Inventory
Option 3: Sales Turnover
Option 4: Average Collection Period by dividing it into 365.
Answer (1)
9th Jan, 2024
Correct Answer: Average Collection Period by dividing it into 365.
Solution :
The average collection period is the length of time it takes for a company to obtain accounts receivable payments due from its clients.
By dividing the inventory turnover ratio by 365, the average Collection Period can be calculated.
Hence option 4 is the correct answer.
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