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The first step in working out the inventory conversion period is to calculate the:
AInventory transfer ratio
BInventory transport ratio
CInventory taxation ratio
DInventory turnover ratio
Answer & Solution
Correct answer: D. Inventory turnover ratio
1. Average inventory feeds into it.
2. The ratio then gives the days.
3. It is the inventory turnover ratio.
_Source: OpenStax Principles of Finance 2e, Chapter 19, The Importance of Working Capital._
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