Inventory turnover is calculated as cost of goods sold divided by ending inventory.?

Question

I think this is true

Answer 1

Actually it's COGS divided by average inventory to be more accurate. It means the number of times per year that Inventory turns over. Keep in mind that the result is an average, since sales and inventory levels are likely to fluctuate during the year. Since inventory is at cost (not sales value), it is important to use the Cost of Goods Sold.