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Inventory turnover and days' sales in inventory both belong to which ratio family?
AProfitable
BEfficiency
CLiquidity
DSolvency
Answer & Solution
Correct answer: B. Efficiency
1. Group the named ratios into their family.
2. There are four main types of ratios.
3. Four efficiency ratios are examined together.
4. They are accounts receivable turnover, total asset turnover, inventory turnover and days' sales in inventory.
5. So both inventory measures are efficiency ratios.
_Source: OpenStax Principles of Finance (CC BY 4.0), Ch 6 'Measures of Financial Health'_
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