Inventory turnover is the total number of times that the average inventory has been sold or used up during a period.

• A. True
• B. False
• C. It depends on inventory valuation method
• D. It measures warehouse space utilization

Answer: (A)

Inventory turnover measures how quickly inventory moves through the business in a given period. It is calculated as cost of goods sold divided by the average inventory for that period. The statement is true because it describes exactly this idea: how many times, on average, the inventory is sold or used up during the period. Using average inventory helps smooth out seasonal swings so the measure reflects the overall pace of consumption or sales. This focuses on the speed of inventory movement rather than warehouse space. While the exact number can be influenced by the method used to value inventory (which affects COGS and reported inventory levels), the concept of turnover as the rate at which inventory is consumed or sold remains correct.