Practice Quiz

Supply Chain Management

Category - Inventory

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An inventory turnover ratio:
  1. Measures how often a company moves its inventory out to its supplies within a systematic period of time.
  2. Measures the predictability of inbound inventories.
  3. Measures the profitability of trading inventories.
  4. None of the above.
Explanation
Answer: A - The inventory turnover ratio is as crucial as any other measures for inventory control. It measures how often a company moves its inventory out to its supplies within a systematic period of time. Knowing this helps companies move to move their inventory out of factories faster, resulting in more efficiencies in inventory management.
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